Preamble

The House met at half-past Two o'clock

PRAYERS

[MADAM SPEAKER in the Chair]

PRIVATE BUSINESS

BRITISH WATERWAYS BILL [Lords] (By Order)

CROSSRAIL BILL (By Order)

EAST COAST MAIN LINE (SAFETY) BILL (By Order)

GREATER MANCHESTER (LIGHT RAPID
TRANSIT SYSTEM) BILL [Lords] (By Order)

WOODGRANGE PARK CEMETERY BILL [Lords]
(By Order)

RIVER HUMBER (UPPER BURCOM COOLING WORKS)
BILL [Lords] (By Order)

Orders for Second Reading read.

To be read a Second time on Thursday 1 April.

BRITISH RAILWAYS (No. 4) BILL (By Order)

Order read for resuming adjourned debate on Question [8 February], That the Bill be now read a Second time.

Debate to be resumed on Thursday 1 April.

Oral Answers to Questions — AGRICULTURE, FISHERIES AND FOOD

Beef Special Premium

Mr. Pickthall: To ask the Minister of Agriculture, Fisheries and Food what steps he will be taking to reduce bureaucracy involved in the beef special premium.

The Minister of Agriculture, Fisheries and Food (Mr. John Selwyn Gummer): We are operating the new beef special premium scheme as simply and as flexibly as we can, within the framework laid down by the European Community rules and remembering the need to make sure that public money is fully accounted for.

Mr. Pickthall: Does the Minister agree with Mr. Richard Cowan, the head of the Ministry's beef division, that no sane person could have devised the beef special premium scheme? Does he agree that the introduction of the CID passports will create immense problems for farmers, particularly in relation to the larger cattle markets? Does he further agree that in conjunction with the integrated administration and control scheme—IACS—bureaucracy, which will come in too late for farmers, they will have too little time to complete the forms, so many of them may be brought close to despair? Will he further agree that if he can take decisive steps to ameliorate this nonsense, he will have done something tangible to put alongside the vaunted campaign by the President of the Board of Trade to reduce over-regulation and red tape?

Mr. Gummer: I am extremely enthusiastic about getting rid of over-regulation and red tape. That is why I introduced a Bill to abolish the milk marketing boards and to take powers to abolish the Potato Marketing Board. I am sad that the hon. Gentleman was here voting against both those deregulation measures two days ago.
The beef arrangements are not what I should like, because there are two payments of premium, not one. One would facilitate a simpler system, but, because of this system, we have to have what we propose, and it will be as simple as we can make it.
Under the IACS scheme we will pay out large sums of money to the public. Farmers will have six weeks to fill in the forms, which are as simple as we can make them. They have been carefully written—I have taken great care over them. I think that the hon. Gentleman will find that farmers will be pleased with the results, which will be much better than those in many other countries.

Mr. Marland: Is my right hon. Friend aware that in addition to the extra office work that this involves, it will also involve farmers in a considerable amount of extra work handling cattle—they have to be handled on several more occasions, to check their tags and the documentation? My right hon. Friend will not be aware, but he may be interested to know, that my next-door neighbour has 200 cattle—[HON. MEMBERS: "Ask a question."] I have asked a question. It took three men almost half a day to sort those cattle out. Is it really impossible to go back to the old system?

Mr. Gummer: I am sorry, but it is impossible; otherwise, my hon. Friend's neighbour would not be able


to get the money that he deserves, and it is likely that the money would go to people who should not get it. If my hon. Friend's neighbour fails to get the money that he wants, deserves and needs, the first person to whom he will complain will be my hon. Friend. I am insistent that he should not be put to that trouble as well.

Mr. Tyler: May I press the Minister a little more on the timing of the integrated administration and control scheme forms? He said just now that farmers would have six weeks to fill them in. Can he guarantee that the forms will be in farmers' hands by 1 April, All Fools' day? Can he tell us, if he cannot give that guarantee and six weeks cannot therefore be used for the purpose, whether he will postpone the deadline?

Mr. Gummer: There will be no question of a delay, because we are trying to stop fraud throughout the Community. The hon. Gentleman and his hon. Friends are always pressing on that matter, and I entirely support that. We will meet the deadline. The forms will be out to farmers by 2 April—I chose that date as being a little more elegant than the one the hon. Gentleman would like—and that will give people six weeks to fill in the forms.
We have continually reminded farmers that they will need to have certain maps beforehand. Press releases have again been issued this week reminding people of the need to do that. The Ordnance Survey has done its best to provide those facilities and, as long as people get in touch with it before 17 April, they will have the full one-stop shop arrangements from the Ordnance Survey. My fellow Ministers and I will be available to help them in that respect. We will do everything that we can to ensure that Britain does better than anyone else.

Mr. Marlow: We all sympathise very deeply with the difficulty in which my right hon. Friend finds himself. However, if the scheme runs into the sand, as some people believe is likely, could my right hon. Friend send a party to Italy to see how they do it there, because I am sure that they will have it fixed up quite nicely?

Mr. Gummer: If my hon. Friend had supported the Government in the Lobbies last night and on previous nights, we should be in a position to deal with such matters much more effectively. If my hon. Friend would put his vote where his mouth is, that would be much more helpful.

English Fishing Industry

Mr. Austin Mitchell: To ask the Minister of Agriculture, Fisheries and Food if he will make a statement on the state of the English fishing industry.

The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. David Curry): The most pressing immediate problem facing the fish catching industry is the weak state of the market.

Mr. Mitchell: Instead of blaming the fishermen for the bankruptcy that they face and instead of compounding that bankruptcy by the insanity of days-at-sea limitations, why does not the Minister act? Why does he not deal with the small haddock crisis by increasing the minimum landing sizes? Why does he not ban the landing of round fish? Why does he not increase mesh sizes? Why does he not deal with Russian imports on a temporary basis, with a dumping ban? Why does he not provide the same kind

of financial support for the industry as that provided by the French? Why does he not suspend the Sea Fish (Conservation) Bill and talk to the industry? Most of all, why does he not stand up for fishing instead of lecturing—[Interruption.]

Mr. Curry: And why does the hon. Gentleman not think for himself instead of simply repeating every prejudice of the fishing industry? He would do fishermen a greater service if he did that. And why does he not think of his own constituents and the large number of people in the processing industry whose jobs depend on an adequate supply of fish? We will tackle the problem of small fish if the whole of the British industry will agree. We are asking its opinion and we will await the response from Northern Ireland and Scotland. I can act only if there is agreement. We will wait and see whether there is agreement. I have my doubts.

Mr. Harris: If there is another blockade by fishermen tomorrow—we hope that there will not be—will my hon. Friend accept that such action stems from a feeling of despair among many of our fishermen, not least in the south-west? However, will he cast some light on imports, particularly from Russia, and tell us exactly how much fish is being imported from Russia and how much cod is being landed by our own fishermen?

Mr. Curry: I hope that the industry will not resume its saga of blockade, demonstration and destruction of fish, particularly as recent signs are that fish prices have firmed considerably. That is what we said would happen. Perhaps that has happened because fishermen have been demonstrating so much that they have not been catching so many fish and fewer fish have been landed.
The prices of cod, haddock and plaice are roughly at last year's level and I am glad about that. That is very good news indeed. However, it shows that the whole of the problem does not lie with imported fish. As the hon. Member for Great Grimsby (Mr. Mitchell) acknowledged implicitly, there is a problem with small fish in the marketplace. There have also been very heavy landings of cod in Humberside. Some estimates state that twice as much cod is being landed as was landed this time last year from the north Norway fisheries.
It is difficult to know the precise quantities of Russian fish. Some of it is imported by the British fishing organisations themselves. However, it is certainly not enough to account for the whole of the problem in the market. We must look within our own industry to discover the reasons for some of those problems. If we look objectively, we can find the answers.

Mr. Salmond: Are not the short tempers and insults from the Government Front Bench a combination of panic and guilt about the situation in the fishing industry? When the Minister meets the English fisheries, will he synchronise that meeting with the Scottish fisheries Minister so that they both accept their inescapable responsibility for the destabilisation of the fish market at the present time? What measures is the Minister taking to improve the situation for English and Scottish fishermen?

Mr. Curry: The English and Welsh fishermen are telling us at the moment that they wish to ban imports of Russian cod. However, the Scottish Fishermen's Federation tells us that it does not want to ban those imports because it depends on the Klondiking fee for the sale of herring later


in the season. As the two major parts of the industry are diametrically opposed, it makes it more difficult than it would be for fisheries Ministers if the two parts held the same point of view, and that point of view was sensible.

Sir Peter Emery: Will my hon. Friend time and again continue to repeat, for all the people of the fishing industry, the need for conservation? The sort of attacks that we have heard today do not take any account of the need to safeguard fish for the future, which we shall not have without the proper conservation measures.

Mr. Curry: I will certainly repeat that. My hon. Friend will be happy to know that we think that we are very close to agreement with the industry on a fully fledged conservation forum, to look at all the conservation measures, in which the Scottish and Northern Ireland industries will participate. The only problem is that, yesterday, the English fishing industry suggested that it was getting last-minute hesitations because it wished me to defer the Sea Fish (Conservation) Bill entirely before it would talk. As we have made it clear that that was not a possibility and that technical conservation cannot provide all the answers, it would be very silly if it withdrew from that forum at the last minute. Conservation means the future of the fishery—if there are no fish, there is no future. Fish depend on conservation.

Mr. Morley: Does the Minister accept his responsibility for fisheries management? What kind of management is it that produces a fish famine before Christmas and cod mountains in the new year? Will he take action on round fish and minimum landing sizes? Above all, will he have genuine talks with the fishermen and take the opportunity of surplus fish to bring in proper conservation measures? He should consider them as an alternative to the Sea Fish (Conservation) Bill, which has been widely rejected.

Mr. Curry: Before the hon. Gentleman invites me to start regulating the amount of fish that must be landed from north Norway and to regulate every single day's catch by the fishing industry, he should think rather harder. We have producer organisations with responsibility for managing the fisheries. We have suggested how they can manage them more effectively, but they do not want to do it that way; they want to be left to do it their own way. We will do our best to eke out the fishery throughout the whole year, but those organisations have their role to play as well. It is not good enough for the industry always to find somebody else to blame for its problems. We will keep talking to the industry, but it must accept that there is a problem in the management which must be solved by the industry, as well as by me.

Self-sufficiency

Mr. Dickens: To ask the Minister of Agriculture, Fisheries and Food what assessment he has made of the duration of United Kingdom self-sufficiency in food in the event of docks and airports being unavailable.

The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Nicholas Soames): Food stocks would be sufficient to maintain the current levels of supplies in the United Kingdom if port and airport facilities were disrupted. In the unlikely event of long-term disruption, adequate supplies of food would still be likely to be available.

Mr. Dickens: I thank my hon. Friend for his reassurance. Does he accept that we owe a tremendous debt of gratitude to the farmers of the United Kingdom, and that self-sufficiency in food is of paramount importance? It is no good having the greatest nuclear deterrent in the world and placing ourselves in a position to have to submit through starvation. [Interruption.]

Madam Speaker: Order. Let us hear the answer.

Mr. Soames: I think that my hon. Friend would do extremely well in those difficulties. He is perfectly correct in recognising that British farmers and growers are second to none in the world in the efficiency of their production. It is nevertheless true that we need to do more to ensure that the marketing of our food is better. If we were at any time placed in the difficult circumstances that my hon. Friend has described, I hope that he would take comfort from Mr. Jonathan Porritt, as reported in The Star today, and eat squirrels.

Fishing

Mr. Bowden: To ask the Minister of Agriculture, Fisheries and Food if he will meet a representative group of south coast fishermen to discuss the implementation of EC fishing regulations.

Mr. Curry: Yes.

Mr. Bowden: Is my hon. Friend aware that the fishermen in my area are very responsible—they have been following my advice not to involve themselves in any illegal or criminal action—but their patience is wearing thin? Is he further aware that a group of them went over to continental ports and found that there was no effective operation by fisheries inspectors and that the fishermen were getting away with murder by landing undersized fish and not obeying quotas? Is not it about time that we had a level playing field in the fishing industry?

Mr. Curry: I entirely agree with my hon. Friend. Effective control means effective conservation in fisheries. Our proposals will tighten up the controls and inspect the inspectorate. We are considering the use of more advanced technology to discover what is happening in the fishing industry. I shall take those matters up with the new French Government immediately. There does not seem to be a great deal of point in taking them up with the old French Government. My hon. Friend will accept that we are not wholly innocent in these matters, as Opposition Members will acknowledge.

Mr. Ainger: Is the Minister aware that last week I was in the Commission building with Mr. Paleokrassas's chef de cabinet, who was abusive of nation states that did not implement the regulations that the Commission issued on 22 and 25 February on the size, health, quantity and minimum price of fish? Is he further aware that fishermen in Britain still complain that, in some markets, the minimum price is not being reached? What does he intend to do about that?

Mr. Curry: As I explained to the fishing organisations yesterday, we have been in touch with Customs and Excise and we have made sure that we have a proper system of control, not merely on the minimum import price but on the weight of the fish being landed, to ensure that there is no fiddling. That will put a floor in the market. The answer


lies not in banning imports, given the damage that that would do to our processing sector and the ultimate consumer, but in ensuring that fish is landed at a fair price. This afternoon, the Commission will make proposals for more effective monitoring of landings by third-country vessels to ensure that they, too, observe the minimum price and hygiene rules. That is a measured response to a crisis. We must not let it get out of proportion, but the marketplaces suggest that what we expected to happen is happening, and that is good news for fishermen.

Support Policies (Prices)

Mrs. Gorman: To ask the Minister of Agriculture, Fisheries and Food what effects agriculture support policies have on the prices charged to consumers.

Mr. Gummer: The consumer will benefit from the move to lower support prices, which form the basis of the recent CAP reform.

Mrs. Gorman: Is my right hon. Friend aware of the work of Dr. Brian Burkitt, a specialist on EC finances at Bradford university, who has produced a report that says that most of the £10 billion net that we have contributed went to the CAP? He also tells us in that report that for every £3 spent by the British people on food, £1 could be saved if we were to open our markets to food imports from other parts of the world. Is that not a better way to put a bit of butter on people's bread than paying out to the farmers?

Mr. Gummer: I hope that my hon. Friend would not wish the farmers of Essex in and surrounding her excellent constituency to find themselves unable to look after the land or to produce the food to which our hon. Friend the Member for Littleborough and Saddleworth (Mr. Dickens) referred earlier. I hope that my hon. Friend will accept that we are proud of what our farmers do in producing a high proportion of the food that we eat. We want to encourage them to sell more in the new home market of the single market. I know that my hon. Friend will want to support us in doing that, through her support for the Maastricht treaty.

Mr. Alan W. Williams: Does the Minister recognise that there is considerable public hostility to the CAP, especially as so many of its resources are devoted to the storage and disposal of unwanted surpluses, and when 80 per cent. of its resources go to the 20 per cent. richest farmers? Does the right hon. Gentleman agree that money needs to be redirected towards environmental protection, improving the landscape and more extensive agriculture, all of which would help to support more small farmers?

Mr. Gummer: Surely the hon. Gentleman, who represents an agricultural constituency, has noticed that, in the CAP reform, the British Government were able to secure a wholehearted change from the original proposals so that environmental improvement is now at the heart of that policy. That is a British achievement and I should have thought that the hon. Gentleman, even if he is partisan in other things, would wish to congratulate the Government on that success.

Small Farms

Mr. Amess: To ask the Minister for Agriculture, Fisheries and Food what new measures are being contemplated to assist small farms.

Mr. Curry: Our policy does not distinguish between farms according to size. Our plans to reform agricultural tenancies should, however, help people to enter the industry through liberalising the rented sector.

Mr. Amess: Will my hon. Friend accept that the 28 farms and smallholdings in my constituency of Basildon welcome the proposals that he has just outlined? Will he recognise that many of those farmers support the deregulation of farming as they complain to me that they seem to have more forms to fill in than animals to feed?

Mr. Curry: The people of Basildon are the first to demand firm controls and clear accountability when spending taxpayers' money. That is why they re-elected my hon. Friend to represent them—the result which shook the world, or at least the BBC. My hon. Friend can assure the smallholders and taxpayers of Basildon that we have the lightest and simplest controls consistent with ensuring that their money is properly spent.

Mr. Flynn: Does the Minister agree that the best thing that he could do to help small farms would be to make productive the set-aside land that is now running to waste? If it were used to grow biodiesel fuels, 750,000 tonnes could be grown, 7,000 jobs would be created and we should become less dependent on imported fuel. Biodiesel fuel is environmentally friendly. Why have France and Germany roared ahead with the mass production of biodiesels when all that we have is three buses running on such fuel? Why have we been so laggardly?

Mr. Curry: The very small farmers do not have to set aside land. The real answer lies with the non-rotational scheme. That gives the possibility of planting crops, of biomass, of woodland and of recreational purposes—opportunities which are not realistic under rotational set-aside. We plan to build the non-rotational scheme to give just those advantages.

Bovine Spongiform Encephalopathy

Mr. David Evans: To ask the Minister of Agriculture, Fisheries and Food what is the current number of bovines diagnosed as suffering from BSE.

Mr. Soames: Up to 19 March, 89,014 cases have been confirmed since 1986. New suspects are being reported at a higher rate than last year because animals born immediately before the July 1988 ruminant feed ban are now reaching the age at which disease is most likely to occur. However, the rate of increase has slowed dramatically.

Mr. Evans: I thank the Minister for his reply. Does he agree that if we had listened to the rantings of that lot opposite, there would not be a British beef industry? It is only as a result of my hon. Friend and his Ministry keeping their nerve that the British beef industry is in such good heart. When these beasts get the disease, do they jump up and down, do they shake their heads, do they lose their way and do they have glazed eyes? Does that remind my


hon. Friend of that lot opposite? Would it be a good idea for my hon. Friend to send a senior vet down to Walworth road this afternoon?

Mr. Soames: The House will be pleased to hear that a live test is about to become a fact of life. My hon. Friend may find it convenient to offer that test to the Leader of the Opposition. My hon. Friend is perfectly correct on the more substantial point. The scaremongering attached to this serious matter has not helped. My hon. Friend is also entirely correct in that the findings of the Southwood report and of the Tyrrell report, all the proper, fully constituted and substantiated scientific evidence that has been placed before the House and everything that we have laid before the House are going entirely according to plan. The disease is working its way through the system and we hope that we shall shortly see some substantial progress.

Dr. Strang: As the experiment that the Minister set up to establish whether there is maternal transmission of BSE from cow to calf will not be concluded for another three years, would it be a wise, precautionary measure to implement the recommendation of the Select Committee on Agriculture and to extend the offal sales ban to all animals, including animals under the age of six months?

Mr. Soames: The hon. Gentleman raises an important point. There is no evidence that there is maternal transmission; if it were a significant factor in the epidemic, we should have seen it now. Even if it does occur, it will not prevent the epidemic from disappearing. The question of the various other animal feeds has been around for some time, and both our professional scientific advisers have not felt it necessary to implement a ban.

Miss Emma Nicholson: Will my hon. Friend endorse the basic scientific research into BSE which is being conducted by the Medical Research Council, whose painstaking work on the different types of scrapie is most likely to bring the answer soonest, although it does not seem likely to be the answer offered by the hon. Member for Edinburgh, East (Mr. Strang)?

Mr. Soames: My hon. Friend is right. The scientific research into this difficult and serious matter has been painstakingly and brilliantly conducted by a wide range of scientists from not only the Medical Research Council but the Ministry of Agriculture, Fisheries and Food, the Central Veterinary Laboratory and others. My hon. Friend will be pleased to note that the increase in newly reported cases has slowed dramatically. There was an 80 per cent. increase between early 1991 and early 1992, but an increase of only 8 per cent. between early 1992 and 1993. Science has done us well and we look forward to the proper conclusion of this matter as the disease gradually works its way out of the system.

Common Agricultural Policy

Mr. McFall: To ask the Minister of Agriculture, Fisheries and Food what is the latest estimate in pound sterling of total expenditure throughout the EC under the CAP for 1993.

Mr. Gummer: A total of £28,000 million to about 8 million farmers, who provide the food for more than 320 million people.

Mr. McFall: When will the Government take an initiative to reduce the spiralling costs of the CAP, which already are unacceptable? Does he agree with Michael Jacquot, the EC controller, that they will remain within the 1994 budget guidelines only by creative accounting? Do not the MacSharry proposals only increase the costs of this policy to the EC taxpayer?

Mr. Gummer: That is why we got rid of the MacSharry proposals and replaced them with our own. That is what the CAP reform achieved. The hon. Gentleman should recognise that we are seeking to reduce, and have reduced, the resource costs of the CAP. I hope that he will accept that the nation that battles most to keep the CAP within budget is the United Kingdom. I hope that he will ask his hon. Friends to accept that, if we manage to do so, they cannot continue to demand more and more for different groups of farmers while complaining about the bill.

Mr. Oppenheim: As Opposition Members have clearly come to the sophisticated and intelligent conclusion that trade barriers and subsidies for agriculture harm taxpayers and consumers, why have they not reached the same conclusion for coal? As they are such keen advocates—

Madam Speaker: Order. The hon. Gentleman is moving away from the CAP. Can he keep his question to the CAP?

Mr. Oppenheim: As they are such keen advocates of industrial policy and intervention, which is exactly what the common agricultural policy is, why do not they praise the results of the policy—immense damage to third-world sugar producers, huge burdens on taxpayers and consumers and unsustainable surpluses?

Mr. Gummer: My hon. Friend is perfectly entitled to fight the Labour party with the enthusiasm that is so characteristic of him, but he would not find it so easy to do so if the farmers of Amber Valley and of surrounding areas were not given reasonable support to look after the land and produce the food that we need. I hope that he will support the way in which the Government have fought to ensure that developing countries, particularly those to which we owe so much in the West Indies, have a continued market for their bananas.

Mr. Campbell-Savours: We all welcome the Fontainebleau rebate, but has not its existence prevented British Ministers from demanding a fundamental review of CAP finances? Are not we, in effect, compromised?

Mr. Gummer: No, certainly not. The hon. Gentleman has not grasped the fact that British Ministers have won their battles in the European Community and that the CAP reform is designed on what Britain wanted. There was no single major element of our negotiating list that we failed to secure in those negotiations. The hon. Gentleman would do well to follow that example, but he will not have the opportunity of doing so.

Mr. John Greenway: When my right hon. Friend meets the new French Minister for Agriculture, who will be appointed soon following the annihilation of the socialists in France, will he remind him that the common agricultural policy reforms ensured a level field for producers and that there will be no going back on those reforms and the need for a GATT settlement?

Mr. Gummer: I look forward to meeting my new French counterpart when he or she is appointed and to


discussing with that person the need for Britain and France to ensure that the European Community provides a proper basis for competitive farming, from which both British and French farmers will benefit. I join in my hon. Friend's pleasure at seeing sister parties winning the elections in France and proving again that socialism is dead.

French Fishermen (Attacks)

Mr. Donohoe: To ask the Minister of Agriculture, Fisheries and Food what discussions he has had with the French authorities to protect consignments of British fish from attacks by French fishermen; and if he will make a statement.

Mr. Curry: Both the French Agriculture and Fisheries Ministers gave my right hon. Friend and myself undertakings in Brussels last week about the safety of British agriculture and fish products. We may need to update those shortly.

Mr. Donohoe: Given the obvious frustration among both the French and British fishing communities, not least because of the massive downturn in fish prices at the quayside which they are having to put up with, why do prices in the shops remain at a high level? Given that fact, will the Minister instigate an inquiry?

Mr. Curry: The hon. Gentleman has to distinguish between fish arriving in frozen blocks for processing—the largest part—and fresh fish that is landed. There is no great surplus of certain types of fish. The heart of the problem is the large-scale landing, both of cod into Humberside and of small fish into the Scottish and other ports, which are pulling down the market. There is a similar problem in France. The answer lies in tackling any abuses of imports, which the Community has acted to do, and in addressing how to manage fisheries better within the United Kingdom and France, including control.

Mr. John Marshall: Will my hon. Friend confirm that there are many more people employed in the fish processing industry than in fishing and that it is important that there are adequate supplies of fish for the industry to process and for the consumer to eat?

Mr. Curry: That is exactly the case. The largest part of fish is sold not on the fresh market but in the processed market. It goes into fish fingers and fish and chip shops. That market depends heavily on imported products. The last thing that would help the long-term future of the industry would be to drive the consumer away through shortage when there are readily available competing proteins at low prices.

Mr. Robert Hughes: Although it is clear that compensation for British fishermen and imports must be tackled, does the Minister accept that we shall not solve the crisis in the fishing industry as long as the traditional distrust between those who catch and those who process persists? Therefore, will the Minister get together with both sides of the industry and look at ways to regulate the market better and, perhaps even more important, at ways in which the market for fish can be expanded, so that this wholesome food becomes a regular part of people's diet rather than an occasional product that they have when they can afford it?

Mr. Curry: I have tried to do exactly what the hon. Gentleman suggested. Yesterday, I met fishing industry representatives from the National Federation of Fishermen's Organisations and the processors. I suggested to each side that they might like to meet the other, either under my chairmanship or simply in my office. The processors were agreeable, but the fishing industry refused to do so.

Dr. Strang: As the Minister has acknowledged that imports are part of the problem in both the French and the British markets, was not it unhelpful, to say the least, for the Minister of Agriculture, Fisheries and Food to say earlier this week that prime responsibility for the problems facing the British industry lies with British fishermen? As the Council of Fisheries Ministers has accepted that the minimum import price arrangements have not been working, are not we entitled to attach a great deal of store to its proposals for more effective control of direct landings by ships of third countries, which the Minister announced that the Commission was to make public earlier today?
Following what the Minister said about the processing and catching sides of the industry, does he agree that there is a strong case for having a summit of all the interests to see whether they can come up with more effective collective action to stop a repetition of these problems?

Mr. Curry: The Commission proposal on making sure that landings from third-country vessels observe the same standards as we require came from me, so I am very pleased that, as I understand it, that is to be carried forward by the Commission. My right hon. Friend was stating the obvious. There are various strands in this crisis. One of them is imported fish, but it has been very much exaggerated. There have also been very large landings on Humberside of fish from north Norway. Some estimates put this at double the amount landed by this time last year. There is also a lot of very small fish on the market. It is true that the Government have responsibility, but the industry, too, must look at how it can manage its fisheries more effectively. That is why we are consulting on certain measures that might address the problem of small fish on the market.

Mr. Ian Bruce: I wonder whether my hon. Friend has heard the reports from Weymouth. Despite the fishing disputes all round France and Britain, our port has been open to all fishermen. We gave a warm welcome to French fishermen who wanted to unload their catches there. Will he ask his colleagues in the European Community if they would like to be as communautaire as Weymouth fishermen and Weymouth fish docks and perhaps follow the example that we are setting in Dorset?

Mr. Curry: The fishermen in my hon. Friend's constituency are behaving in the long-term interests of their industry. We have had some 89 requests now for safe passage of our products through France according to the system that we set up. They have been responded to and trade is now flowing much more normally. We should give credit for the fact that, after a period of delays, we are now getting free access to the French market, as we demanded, and the promises are being observed.

Export for Slaughter

Mr. Lewis: To ask the Minister of Agriculture, Fisheries and Food if he will make a statement on current progress towards improving welfare provision for animals exported live for slaughter.

Mr. Gummer: I raised this at the last Agriculture Council and the Commission has agreed to bring forward proposals for further measures to protect the welfare of animals in transit. The present circumstances are not satisfactory and we will continue to press until we get a very much better answer.

Mr. Lewis: I accept the Minister's response, but may I remind him of his statements during our EC presidency when he gave every indication that the matter was to be tackled more urgently? Is he aware that there has been a very large increase in the numbers of animals being exported? He will be aware that we have recommenced exporting to Spain. That cannot be good for the animals and every welfare organisation in the country is opposed to what is going on at the moment. I ask for even more urgency on a matter that we have discussed on many occasions in the House.

Mr. Gummer: The hon. Gentleman and I are not far apart on the matter. We are seeking to ensure that the standards of animal transport throughout Europe are raised to the standards in this country. I hope very much that we can ensure that the rest of Europe learns about animal welfare from us. We have a lot to learn from them, perhaps, in our treatment of children and old people, but we have much to teach them on animals.

Mr. Gale: Does my right hon. Friend agree that, while some issues can benefit from subsidiarity, environmental matters in general, and animal welfare matters in particular, require a European approach? Will he confirm that Her Majesty's Government will not agree to any standards for animal welfare, particularly with regard to animals in transit in Europe, that are lower than those that constitute current practice in the United Kingdom?

Mr. Gummer: There is no question of the welfare of farm animals being dealt with as a matter of subsidiarity. These are matters which bear directly on a common agricultural policy and we want the same standards throughout Europe. I have made it clear that I am not introducing unilateral measures in this country; I am insisting that the standards rise throughout Europe. There are very important areas in which subsidiarity should be applied, but this is not one of them.

Mr. Martyn Jones: The Minister will agree that the best thing for animal welfare would be for all animals to be slaughtered as close as possible to the point of production. What measures is he taking, in conjunction with the Agriculture Council, to encourage that in Europe generally and in Britain in particular?

Mr. Gummer: It will be a great help when we have, throughout Europe, slaughterhouses that are recognised by every part of Europe as reaching the same standards. I agree with the hon. Gentleman that the more meat that can be carried on the hook and the less on the hoof, the better, but within the Community there will be transport of live animals. I am determined that that transport shall

be at a standard that is proper and that it reaches the high standards we have in Britain and reaches from the north of Scotland to the south of Sicily.

Dairy Farming

Mr. Garnier: To ask the Minister of Agriculture, Fisheries and Food what proposals he has to improve efficiency and profitability in dairy farming.

Mr. Gummer: At last week's Agriculture Council, the United Kingdom opposed further cuts to the milk quota.

Mr. Garnier: I thank my hon. Friend for that answer and assume that he will recognise the quality of the grassland in my constituency and the quality of its dairy herds. Will my right hon. Friend promote diversification in agriculture by encouraging the breeding of buffalo and the eating of buffalo meat, which not only tastes good but is low in cholesterol?

Mr. Gummer: My hon. Friend failed to mention the importance of buffalo milk, which is very important in import substitution because of the production of mozzarella cheese. I am very proud of the kind of mozzarella cheese that we can now produce in the United Kingdom and I hope that we shall be able to export it to Italy and elsewhere.

Oral Answers to Questions — PRIME MINISTER

Engagements

Mr. Meale: To ask the Prime Minister if he will list his official engagements for Thursday 25 March.

The Prime Minister (Mr. John Major): This morning, I presided at a meeting of the Cabinet and had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today.

Mr. Meale: The House will well recall the promises made by the Prime Minister and many of his fellow Ministers before the last general election about the future of the coal mining industry. Now that, today, we are about to hear about the loss of tens of thousands of jobs, will the Prime Minister apologise to those coalfield communities for what the Government are about to do?

The Prime Minister: The hon. Gentleman will have to curb his impatience for a few moments until my right hon. Friend's statement. He has very little time to wait and then he will be able to judge how right he is or how wrong he is.

Mr. Heald: Has my right hon. Friend seen the 1992 results from Vauxhall Motors today showing huge increase in profits as a result of improved sales, improved market share and a huge increase in exports? Will my right hon. Friend join me in congratulating the work force and all concerned, particularly those living in north Hertfordshire?

The Prime Minister: Yes, I did see those results. They are certainly excellent and I am delighted to congratulate the company on its results, which show what a well-managed company with the right product range can achieve, even in difficult world trading circumstances.

Mr. John Smith: Does the Prime Minister now understand how foolish he was to claim last October that the closure of 31 pits was—and I quote him directly—"economically unavoidable and better done cleanly and quickly"?

The Prime Minister: As the right hon. and learned Gentleman knows, we carried out a full review of these matters and my right hon. Friend the President of the Board of Trade will set out in full detail the outcome of that review shortly. It is the most thorough review of the coal industry that has been undertaken for very many years. It posed many difficult issues which we have been prepared to face. The right hon. and learned Gentleman might also acknowledge the fact that we have supported the industry over the past 14 years to the extent of £18 billion.

Mr. John Smith: The House and the country will have noticed that the Prime Minister does not, indeed cannot, deny that his original intention, as he said himself, was to close all 31 pits immediately. How does he account for that appalling error of judgment?

The Prime Minister: I know that the right hon. and learned Gentleman is desperately keen to get his usual fix on the early evening news, but he will have to wait for my right hon. Friend's statement.

Mr. John Smith: In the course of the Prime Minister's twisting and turning over the past five months, has he yet begun to appreciate the vital importance of Britain's coal industry to our future energy security? Whatever is or is not in his White Paper, does the Prime Minister now realise that the rigging of the market to secure short-term profits for privatised electricity companies has put at risk the long-term security of energy supplies which should be the cornerstone of any Government's energy policy?

The Prime Minister: The right hon. and learned Gentleman will find it difficult to rewrite his own history. He should remember Labour's record on pit closures. The last Labour Government closed 313 pits and more than 200,000 of the work force lost their jobs. The Labour party cannot live down its past. It backed the National Union of Mineworkers when that union was holding the country to ransom during a year-long strike in the 1980s; it backed demands for unrealistic wages; and it backed demands for overmanning and bad working practices. If the right hon. and learned Gentleman had not backed those things in the 1980s, many more pits might be open today.

Mr. Thomason: Does my right hon. Friend agree that charge capping and council tax capping are necessary evils to protect the payer from the worst excesses of socialist local government administration? Will he abhor the proposal of the hon. Member for Blackburn (Mr. Straw) that capping be abolished and that control of local government spending be handed over to the unions?

The Prime Minister: My hon. Friend is right. The capping of spendthrift local authorities is necessary in order to protect taxpayers. My right hon. and learned Friend the Secretary of State for the Environment will cap wherever necessary this year, as in other years. My hon. Friend the Member for Basildon (Mr. Amess) may be keen to know that it is most unlikely that Conservative Basildon this year, unlike Labour Basildon in previous years, will require capping.

Ms Abbott: To ask the Prime Minister if he will list his official engagements for Thursday 25 March.

The Prime Minister: I refer the hon. Lady to the answer I gave some moments ago.

Ms Abbott: Does the Prime Minister accept that, whatever is in the statement to come, what public opinion outside the House wants is the saving not of 10, 12 or 15 pits but of all 31? It is not out of sentimentality that public opinion demands this. Whatever the short-term interest of the privatised fuel industry, it would be madness, in the long term, for this country to become dependent upon foreign coal and it would be madness to add to the standing army of the long-term unemployed.

The Prime Minister: The hon. Lady cannot have heard what I said about the Labour Government's record in closing pits. In carrying the review forward, we have had to balance two conflicting factors—our desire to save as many jobs and pits as possible and the hard, cold, real fact that British Coal is producing more coal than its customers want or it can sell. I am confident that my right hon. Friend's review offers the best way forward, both for the coal industry and for the country.

Mr. Cormack: Is my right hon. Friend aware that hon. Members in all parts of the House have watched with admiration President Yeltsin's courageous struggle to bring both economic and political freedom to Russia? Will my right hon. Friend take the opportunity today to send the good wishes of the House to President Yeltsin at this very critical time?

The Prime Minister: I am happy to offer my support to President Yeltsin and to express my support for the reform programme. Over the weekend, I sent the President a message precisely about that and I received a reply from him earlier this week. My right hon. Friend the Foreign Secretary plans to visit Moscow next week.

Mr. Ashdown: In the—[Interruption.]

Madam Speaker: Order. These interruptions take up time.

Mr. Ashdown: In the shadow of last week's atrocity in Warrington, which has claimed yet another life today, was the Prime Minister as moved as I was by the spontaneous and powerful expressions of sympathy and support from the people of Dublin for the people of Warrington, who suffered in that atrocity at the hands of the IRA? Does he agree that people such as Susan McHugh and Gordon Wilson speak for millions when they say that enough is enough? Is it not the case that if the people of Dublin can put the past behind them in their search for peace, the politicians of the whole of Ireland should be able to do the same?

The Prime Minister: The tragedy of another young life lost, sadly, this morning will have touched the hearts of many people in this country and far beyond. The events of last week demonstrate that terrorism brings nothing but agony and misery. But as we condemn terrorism, we must bear it in mind that there are many people in Dublin and elsewhere in the Republic of Ireland, elsewhere in Northern Ireland and Irish citizens in this country, who condemn and detest the terrorists as much as do hon. Members.

Mr. Kynoch: Is my right hon. Friend aware of how much I welcome the further progress that he has made in the Budget to extending the 20p basic rate of tax? Will he make further extensions in the years ahead?

The Prime Minister: I assure my hon. Friend that it is our intention to seek to do that. Our aim is a 20p basic rate of tax. We propose to move towards that as rapidly and prudently as we can by extending the 20p rate.

Mrs. Ewing: To ask the Prime Minister if he will list his official engagements for Thursday 25 March.

The Prime Minister: I refer the hon. Member to the answer I gave some moments ago.

Mrs. Ewing: In the continuing context of the Budget, is the Prime Minister aware that changes in the tax regime threaten jobs both offshore and onshore in the oil and gas industries in the north and north-east of Scotland, while the imposition of VAT on domestic fuel represents a threat to the welfare and lives of the elderly and needy in society? Is not it a travesty of justice that the Prime Minister should have introduced a Budget by which, in an energy-rich nation such as Scotland, we gain neither employment nor social benefits?

The Prime Minister: The support that the Government have given the oil industry over many years has brought many tens of thousands of jobs to Scotland, as the hon. Lady knows. There have been changes in the oil regime for offshore drilling in Scotland. That has been welcomed by many of the companies that work there.

Mr. Gale: Knowing him, I am sure that my right hon. Friend will already have sent a message of sympathy to the parents and family of Tim Parry. I hope that he included in that message the good wishes, thoughts and prayers of hon. Members in all parts of the House. Will he find time today to send another message, to the President of the United States, asking him to condemn the people in America who collect money that is paid to the IRA?

The Prime Minister: There is no doubt, as I said, about the feeling in this country—which I know will be shared by President Clinton—over the very sad death of Tim Parry. I know that the American Administration view terrorism in the same way as we do. It is a matter which I have discussed with President Clinton and with his predecessor.

Mr. Bill Michie: To ask the Prime Minister if he will list his official engagements for Thursday 25 March.

The Prime Minister: I refer the hon. Member to the answer I gave some moments ago.

Mr. Michie: Is the Prime Minister aware that the document "Implementing Caring for People: Assessment," which can only be described as sinister, advises practitioners and local authorities that any unmet need should not be recorded, on the ground, in the explanatory note, that, due to the idea now of freedom of access to information, it would be wrong for that information to be recorded just in case the patients or the clients found out what their rights were?

The Prime Minister: The hon. Gentleman knows that we have done more than any previous Administration to ensure that people are aware of their rights in the social security and health spheres. The new community care arrangements that will exist from 1 April will add to that remarkable record.

Mr. Sumberg: Will my right hon. Friend join me in condemning the disgraceful decision of railway workers to bring this country's transport network to a standstill on 2 April? While he is about it, will he invite the Leader of the Opposition to issue a similar condemnation?

The Prime Minister: I am certainly happy to condemn the suggestion that passengers should be severely inconvenienced by strikes of this kind. I hope that that feeling will be shared by the Leader of the Opposition and many others.

Mr. Morley: To ask the Prime Minister if he will list his official engagements for Thursday 25 March.

The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.

Mr. Morley: Will the Prime Minister confirm that under his Government total taxation for most people is far higher than it was under previous Labour Governments? What advice will he give to constituents such as mine, Mr. and Mrs. Cook, who have worked all their lives for a little bit of works pension which is 36p a week above any kind of benefit level? What kind of assistance will they get with the crippling increase in gas and electricity charges when value added tax is applied?

The Prime Minister: If the hon. Gentleman was really concerned about the tax burden, which allegedly he is said to be, perhaps he would withdraw his support from all the spending increases that Opposition Members propose week after week after week.

Coal Industry

The President of the Board of Trade and Secretary of State for Trade and Industry (Mr. Michael Heseltine): With permission, Madam Speaker, I should like to make a statement on the conclusions of the Government's coal review. I must ask the indulgence of the House for what will be a lengthy statement. I understand that my right hon. Friend the Leader of the House will be making arrangements for a debate early next week.
The House will recall that this wide-ranging review was to look at the prospects for the 21 pits proposed for closure by British Coal last October in the context of the Government's energy policy.
First, I should like to pay tribute to the Trade and Industry Select Committee for the detailed work in its report.
I have a number of important new announcements to make about future opportunities for the British coal industry. I am pleased to be able to tell the House that the generators and the regional electricity companies have now formally confirmed their intention to enter into base contracts and the necessary back-to-back contracts which will enable British Coal to supply 160 million tonnes of coal over five years, with 40 million tonnes in the first year and 30 million tonnes in each of the next four years.
The Select Committee identified the central issue—that it is only sensible to produce coal for which there is a market. The key question then becomes how big that market is. There is inevitably great difficulty in predicting the size of a long-term market as complex as the one for coal. The dominant market is in the England and Wales electricity supply industry. Estimates of the size of this market vary widely and a number of different fuels compete for it.
It is central to the Government's energy policy to help create competitive energy markets within which consumers can obtain electricity produced from a diversity of sources at competitive prices. This is the best way to keep consumers' costs down and thereby strengthen our industrial competitiveness. Let me comment therefore on the fuel sources that compete with British Coal: gas, oil, nuclear, orimulsion, coal from various sources and electricity supplied through the interconnector with France.
I agree with the Select Committee that it would be wrong not to take advantage of the massive public investment in nuclear power. Electricity produced from existing nuclear stations has the lowest marginal cost. The benefits should not be denied to British industry and other consumers. We will, however, wish to look closely at any requests from Nuclear Electric for approval for capital investment in relation to proposals for extending the life of any Magnox stations. We will also be bringing forward our review of the future prospects for nuclear power.
Let me deal next with gas. It has been suggested that I should withhold further planning consents for gas-fired power stations. In considering this, I must have regard to my statutory powers and responsibilities. I do not intend to interfere with existing power station consents, or to alter my policy in taking future consent decisions under section 36 of the Electricity Act 1989. Consequently, matters such

as the need for a generating station, its capacity, choice of fuel and type of plant remain commercial matters for applicants.
The House will appreciate that, whatever decisions I might take on new section 36 consents, they could not be relevant to the market for coal for at least another three years, since it would take at least that long for any new station to be brought into operation. In this context, I have decided that the Connah's Quay development in north Wales should be allowed to proceed. This is a sour gas project of a kind that the Select Committee favoured. I am also today granting consent to two smaller projects, one using sour gas at Ryedale in North Yorkshire and a combined heat and power scheme at Aylesford in Kent. Together, the three projects will involve investment of over £2 billion and will lead to the creation of over 5,000 construction jobs, as well as several thousand in related industries.
I have considered carefully the position of orimulsion. As my right hon. Friend the Chancellor of the Exchequer announced on 16 March, orimulsion, like other oil substitutes, will be subject to hydrocarbon oil duty. As such, it will bear duty at the same rate as heavy fuel oil. It will also be subject to the normal environmental controls for which Her Majesty's inspectorate of pollution is responsible. There are existing binding contracts for the import of orimulsion into the United Kingdom, with which the Government have no powers to interfere. The Government have, however, been informed that orimulsion imports to the United Kingdom are likely to be reduced by at least 500,000 tonnes equivalent of coal a year from current levels and to remain at the minimum contractual level for the foreseeable future.
In one area I have been driven to a different conclusion from that reached by the Select Committee. It recommended that I should remove Electricité de France's non-leviable status and ensure that British-produced electricity should gain access to the French electricity market and to third markets through France. I have considered this carefully and I published on 18 March a summary of the legal advice that I had received. The position is clear. Any governmental measure to prevent or restrict imports of electricity across the interconnector with France would run counter to article 30 of the treaty of Rome. Further, the Government would be at financial risk under the indemnity given to the National Grid Company at the time of electricity privatisation and reported to this House.
Electricité de France's electricity's non-leviable status could not be removed without giving EdF the benefit of levy payments. In other words, EdF could have to be given the same premium for its electricity as is now given to Nuclear Electric and financed by the levy. Far from reducing imports from France, this would reinforce their position, and our consumers would end up paying more for their electricity.
I have to tell the House that I see no prospect of reducing the net amount of electricity coming across the interconnector to zero, as indicated by the Select Committee. However, my hon. Friend the Minister for Energy and I have explored the scope for sales of electricity to France across the interconnector. The Minister has had talks with his French counterpart and the indications for sales in later years are good. Confirmation of this came in the announcement earlier this week of an eight-year export contract representing potential sales in excess of


£100 million from the United Kingdom to France. The House will also wish to note that the latest forecast shows that sales by EdF in the United Kingdom are likely to decline progressively and significantly.
I must now address that section of the market which is supplied by deep-mined, opencast and imported coal. The base contracts that I have just announced secure 160 million tonnes over five years at a value of £5·5 billion. This leaves British Coal as one of the world's largest coal producers. Opencast coal is a significant generator of employment providing jobs, whether directly or indirectly, for some 17,000 people throughout the United Kingdom. It is an economic source of energy which needs no subsidy from consumers or taxpayers. It can also play an important role in reclamation and redevelopment of derelict land.
While the Government do not think it would be right to impose arbitrary limits, British Coal has indicated in its evidence to the coal review that it expects its opencast output to fall over the next five years from the current level of 16 million tonnes to 12 million tonnes. British Coal's latest expectation is that opencast output will be lower still.
I welcome the increased scope for deep-mined coal which this represents. It will not affect British Coal's current contracts with companies that operate their opencast sites; nor will it affect the private sector opencast producers licensed by British Coal. My right hon. and learned Friend the Secretary of State for the Environment is currently reviewing the guidance to planning authorities on opencast coal. He will be announcing today how we will be carrying this forward in the light of the White Paper.
British Coal's prospects of winning and holding a share of the wider market for coal depend on increased competitiveness. There is a critical role here for the private sector. We believe that privatisation is the only way of enabling this industry to take full advantage of the opportunities that the market offers. British Coal will therefore begin immediately to prepare for full privatisation. It has confirmed that, in advance of full privatisation, any pits which the corporation does not itself wish to keep in operation will be offered to the private sector. The Government will be making available up to £1 million to assist in funding consultancy studies for management and employee buy-outs.
To provide a further impetus for this, I intend to appoint a board member who will have special executive responsibility for privatisation. This will be supported by a new unit within my Department. The Government will consider legislation to remove the manpower limit for private mines if this proves necessary.
The Government have looked carefully at the position of large electricity users. I am working with the Director General of Electricity Supply to examine the circumstances under which they might bypass the pool. I will also embark shortly on further consultations with the director general, the electricity industry and large users on whether demand-side bidding would improve the workings of the electricity market. In addition, the Government are reviewing the current regulation of on-site generation, which could offer large users an alternative source of electricity.
I turn now to the most important of the Select Committee's recommendations. I have authorised British Coal to negotiate for future contracts on the basis that it would supply at a world market-related price. The

Government are prepared to subsidise the difference between this price and British Coal's cost of production. This subsidy will apply for any additional tonnages that British Coal is able to sell to the generators, whether or not these are on long-term contracts. The subsidy will reduce progressively over the period to full privatisation. The amount of subsidy will depend on the outcome of commercial negotiation, but we are prepared to embrace the range of figures put forward by the Select Committee. These arrangements will be notified to the European Commission under the relevant state aids provisions.
Private sector mines will also be able to seek Government financial backing for supplementary sales at world-related prices on the same basis as British Coal and consistent with the relevant EC provisions, provided that they can demonstrate that this was for genuinely additional tonnages.
I cannot guarantee that supplementary sales will be achieved by British Coal, but both generators have said that they will continue negotiations for such sales. To the extent that these sales fall short of the level envisaged by the Select Committee, expenditure will of course be less than that which they estimated.
I am also aware that coal stocks are at very high levels. There are 33 million tonnes with the generators and a further 12 million tonnes at the pithead. Some reduction in coal output is therefore essential.
As the House would expect, we have kept British Coal closely in touch with our thinking and we have provided it with an advance copy of the White Paper. Having considered this, British Coal has announced today that it is to consult on closure proposals for two of the 21 pits under review—Bolsover and Sharlston—whose reserves will shortly exhaust. Any redundancies will be subject to statutory consultation and notification requirements.
British Coal has also announced that, again subject to consultations, it proposes to place the following six pits on a care-and-maintenance basis—Bevercotes, Clipstone, Easington, Rossington, Shirebrook and Westoe. These six pits and the two proposed for closure in the coming months will be made available to the private sector.
Twelve of the 13 remaining pits will continue to produce while British Coal, with Government financial backing, looks for additional sales at world-related prices. British Coal is proposing that, again subject to consultations, one further pit—Maltby—will be placed on development. This will help to ensure that its reserves are available into the next century. The future of coaling in individual pits will depend on the extent to which intensive efforts over the coming months identify a market for their product or realistic prospect of sale to the private sector.
Safety must continue to be paramount. The Government are determined to ensure, in consultation with the Health and Safety Commission, that the existing high safety standards in such mines are maintained after they pass into the private sector.
I have a general responsibility for competition, which of course includes the electricity market. Both I and the Director General of Electricity Supply have a statutory duty to exercise our functions under the Electricity Act 1989 to promote competition. The director general has the full support of my Department in rigorously policing the competitive electricity market.
I have taken the opportunity of the review to consider a number of long-term issues about the future of the industry. Clean coal technology will be vital to ensuring


that coal continues to play a long-term role in the energy industries. The Government intend to make available an additional £12 million over the next three years to secure the future of the Coal Research Establishment before its transition to the private sector. The Government also intend to encourage links with international research programmes.
The Government intend to publish an annual energy report to provide information relevant to business and investment decisions. In keeping with a recommendation of the Select Committee, the Government, in preparing the report, will be advised by a new energy advisory panel of independent experts.
The Government are acutely aware of the impact that any mining closures have on miners, their families and their communities. We announced a substantial package of measures in October to help areas that might be affected by closures. The Government have decided to increase the amount available to £200 million. The additonal funds will allow major new projects to go ahead. These include a flagship business park in the Nottingham area and advance factory provision in several areas. The regeneration measures are to be co-ordinated by Lord Walker.
I can also announce our intention that the headquarters of the new coal authority proposed under our privatisation measures will be located in Nottinghamshire. In addition, my Department will support the establishment of a new regional development organisation based in Nottingham to attract inward investment to the east midlands.
Finally, let me remind the House of what I said earlier. There can be no guarantees. The market for coal is complex and unpredictable. Even among the experts, opinions differ. I have done all that I reasonably could, consistent with economic realities and legal constraints, to increase the opportunities for British Coal.
It is now for British Coal to make the most of these opportunities. The outcome will be settled, as it should be, in the marketplace. Our policies will give the industry every chance of strengthening its position and achieving future success. It is now up to the people who work in the industry to build on this.

Mr. Robin Cook: The House has just heard a comprehensive admission of failure. There was little in what the President of the Board of Trade said to the House that he could not have said on 13 October and there was much in the statement that he did say on 13 October.
The right hon. Gentleman promised that he would look for new markets for coal. He has just admitted that he has failed to find a market for one single extra tonne of coal. The contracts, which the right hon. Gentleman was pleased to announce to the House today, are precisely the same tonnage as the contracts on 13 October which forced the closure of 31 pits. How can the right hon. Gentleman claim to have saved 12 pits when he has not sold a single additional tonne of coal?
Will the right hon. Gentleman concede that his negotiating skills have delivered a bargain in which he has provided a subsidy on coal to the generators without getting them to agree to one extra tonne of coal? Does he

really believe that a two-year subsidy will change anything? That is not a rescue plan; it is only a stay of execution.
Why does not the right hon. Gentleman admit that the period of two years has nothing to do with the time to turn round those pits and everything to do with his timetable to privatise the coal industry and wash his hands of it? The right hon. Gentleman complained that coal is a complex market in the electricity system. He should know: the Government created that complex market. They created a rigged market which is denying coal a fair chance to compete.
Why did the statement do nothing to cool the dash for gas which is closing the coal mines? Why does not the right hon. Gentleman challenge the sweetheart deals between the electricity companies and the new gas-fired power stations which guarantee them sales, not for two years, but for 15 years? Is not the conclusion from the statement that the only thing that the right hon. Gentleman is prepared to do about the dash for gas is to license three more contracts for new gas-fired power stations?
Why does the statement—[HON. MEMBERS: "What about jobs?"] What about jobs? Conservative Members should consider the 30,000 miners' jobs, the 20,000 people who work in factories, the 10,000 people who shift coal on the railways and the 100,000 who will be made unemployed as a result of the statement.
Why does the statement do nothing to check imports of electricity from France—electricity which is more expensive than electricity produced from British Coal? Does the right hon. Gentleman or any Conservative Member imagine that the French Government would import electricity from us if they had to close French pits to do that? Why do we continue to accept that Community rules oblige us to import electricity from France when we cannot get the French to agree to carry our electricity to Spain?
Why does the statement do nothing to create a level playing field for competition between coal and nuclear electricity? Does the right hon. Gentleman appreciate that, if coal received subsidy as large as that received by Nuclear Electric, it could deliver half its coal to the power stations for free? What kind of competition is that?
Why does the White Paper do nothing to provide stability for coal sales by postponing next year's cut in the guaranteed market to the power generators? Is that why PowerGen withdrew its offer of 4 February to take an extra 55 million tonnes over five years? Why is it that, the longer the review has continued, the less the right hon. Gentleman has been able to deliver?
Can the right hon. Gentleman confirm that we are about to hear in the business statement that the House will be expected to debate a White Paper on Monday which has only just been placed in the Vote Office? Is not the reason for that panic timetable the fact that the right hon. Gentleman is afraid that, the longer the public consider the White Paper, the more they will see through it? The right hon. Gentleman has taken five months to write a White Paper which he dare not allow the House five days to analyse.
Britain's pits have doubled productivity in eight years. They are modern and efficient pits which have cut the price of coal by one sixth in the past five years. What a contrast that is with a Government who have just put up fuel bills by one sixth by slapping VAT on them.
The White Paper does not save a single pit beyond two years; it does not save electricity consumers from paying, through their bills, the extra costs of constructing new gas-powered stations; it does not save the balance of trade from the extra costs of importing coal and gas; it does not save public spending from the cost of closing pits which it would be cheaper to keep open; and it will not save the right hon. Gentleman's reputation.
This mix of short-term subsidy and long-term betrayal may be enough to buy off the rebels on the Government Benches, but it will not buy off the nation, who will not forgive the Government for abandoning Europe's richest coal reserves.

Mr. Heseltine: I think that the whole House will have noted the central accusation of the hon. Member for Livingstone (Mr. Cook) that this was an admission of failure. It is, if I may say so, characteristic that when I have committed hundreds of millions of pounds of taxpayers' support and agreed with the Select Committee report in substance, the hon. Gentleman should think that is a question of failure.
The fact of the matter is that an all-party Select Committee with a majority of Labour members [Interruption.]—a majority of Conservative members and a Labour Chairman—indicated the way forward and I have broadly accepted the thrust of its central recommendation. That is not failure; that is listening to the House of Commons and responding to it.
It is characteristic that, whenever the Government provide an opportunity for British industry to win, the first thing the hon. Gentleman does is to run down the prospects of success. It is quite apparent that he has missed the central point about the nature of the market which the Select Committee and I have identified. What he has done is to fall back on the old arguments about a rigged market.
Why did I not suppress the demand for gas? First, because it is efficient; secondly, because the market has demanded it should be there; thirdly, because a large number of jobs are dependent on it; and, fourthly, because I agree with the Select Committee that we should not do it.
Let us consider the easiest response to the hon. Gentleman. "Why did you not deal with the French?", he said. In the House, on 3 August 1978, the right hon. Member for Chesterfield (Mr. Benn), when Secretary of State for Energy—[Interruption.]—had this to say:
I am informing the Central Electricity Generating Board that it has my approval in principle for investment in the proposed 2,000 mw cross-Channel electricity cable to be constructed and operated jointly with Electricité de France… The expected cost to the CEGB is £131 million. The link is planned to come into operation in stages, the first 1,000 mw in 1982 and the second in 1983."—[Official Report, 3 August 1978; Vol. 955, c. 545–6.]
The problem is that, when he gave permission in principle to the CEGB, he had not wrapped up the details of the contract.
I do not think that we want to preoccupy ourselves only with the unreconstituted left. The right hon. Member for Copeland (Dr. Cunningham) was the Parliamentary Under-Secretary of State for Energy all through the time when this was going on. The right hon. Member for Chesterfield might say that he was only a little fish. The Leader of the Opposition, the right hon. and learned Member for Monklands, East (Mr. Smith), however, was Minister for Trade.

Hon. Members: Resign.

Madam Speaker: Order. The House must come to order. A great many hon. Members want—and are expecting—to put questions. Therefore, time should not be wasted with a lot of noise.

Mr. Heseltine: It was not rigging the market; it was selling out the market. That is what the Labour Government did.

Mr. Jimmy Boyce (Rotherham): Shame on you.

Mr. Heseltine: No, shame on the party that did it.
The next phoney accusation of selling out is the nuclear allegation that the hon. Member for Livingston paraded before the House. Once again, the right hon. Member for Chesterfield, on behalf of the Government of which he was a Member, explaining what he felt to be the future for nuclear provision, said:
If we look ahead at the mix of fuels which we think we shall need in this country in the year 2000, it is not possible to abstract the nuclear component without running a serious risk which no energy Minister could recommend to this House.—[Official Report, 15 May 1978; Vol. 950, c.174.]
That is the argument that has to be presented. I join the right hon. Gentleman, for the first and perhaps the only time in my life, in presenting that argument to the House.
The right hon. Gentleman gave the figure. On 25 January 1978, he told the House—

Several Hon. Members: On a point of order, Madam Speaker.

Madam Speaker: Order. I remind the entire House, including Ministers, that we are not into debate. Debate comes on Monday. [Interruption.] Order. I am on my feet. Hon. Members are expecting to be called, so they should keep quiet now and they might then be called. I seek brisk questions—[Interruption.] Order. Allow me to finish. Equally, I seek brisk responses to those questions so that we might make some progress this afternoon.

Mr. Heseltine: I fully understand your ruling, Madam Speaker. I was merely trying to respond to the inquiries from the hon. Member for Livingston. Let me help you, Madam Speaker. I believe that we have shown British Coal the way forward. We have offered it a chance. We have recognised what the Select Committee said and I commend the White Paper to the House.

Dr. Michael Clark: Does my right hon. Friend accept that Conservative Members appreciate his statement this afternoon and would like to compliment him on his hard work and diligence in coming up with a statement that will be so helpful to the British coal industry? Is my right hon. Friend aware that, in recent years, British Coal has been saying that, by 1995, it will be able to produce and sell coal at world market prices if it is given the opportunity to have assistance through to 1995? Does my right hon. Friend agree that his statement this afternoon gives British Coal not only that very opportunity but the opportunity to have a long and viable future?

Mr. Heseltine: I say at once to my hon. Friend and to his colleagues on the Select Committee on Trade and Industry that I have listened as carefully as possible. It has been an extremely constructive dialogue and I am extremely grateful to my hon. Friend, who has particular knowledge and expertise. I and the Government are trying to give British Coal and, as soon as it can be arranged, the


private sector the opportunity to seek markets with a competitive price for their product. We are all well aware that the more we have privatised the former nationalised industries, the more they have gone out into the world and won for Britain.

Mr. Malcolm Bruce: Will the Secretary of State accept that we welcome the fact that he has listened to the recommendations of the Select Committee on Trade and Industry? However, he should not anticipate that he has the Committee's whole-hearted support, because he has not been able to accept the recommendations in full or to an extent that would have saved more of the pits. I welcome his assurances on gas, but does he acknowledge that it is unfortunate that the Chancellor of the Exchequer did not consider the confidence of the North sea oil and gas industry when he introduced the tax change in the Budget? There could have been a more helpful combination.
The energy industry is in its present state precisely because of the Government's privatisation of gas and of electricity, which was carried out in ways that failed to create a genuinely competitive market. Is not that why Sir James McKinnon now demands the break-up of British Gas? Is not it high time that the Secretary of State reorganised the electricity industry to make the market work? Will he, therefore, accept that the only consistency of Government energy policy is not to have had a policy for the past 13 years? Is not that a denial of the White Paper, which he claimed was to be a comprehensive energy review? There is no mention of an energy review, but just a discussion of a market for coal. This is a short-term fix, which does not meet the long-term needs of the nation.

Mr. Heseltine: The hon. Gentleman must have failed to hear what I said. I said that there would be an independent group of energy experts and that there would be an annual energy report. Those ideas were included after consultation with my colleagues, as a result of the Select Committee's proposals.
I disagree with the hon. Gentleman's views about the North sea. When a tax regime is changed, some win and some lose. Many companies in the North sea can look forward to an improved position from the lower levels of petroleum revenue tax which have been announced by my right hon. Friend the Chancellor of the Exchequer. The hon. Gentleman would not expect me to be drawn on the issue of British Gas because it is the subject of a Monopolies and Mergers Commission inquiry.

Mrs. Elizabeth Peacock: Is my right hon. Friend aware that I recognise the work undertaken by him, by the Minister for Energy and by many in his Department to produce the White Paper? However, will he assure the House today that the White Paper provides an extra and further market for coal? If it does, what will be the immediate effect?

Mr. Heseltine: My hon. Friend has taken an acute interest in the matter and I have been especially grateful to her for her advice on the ways in which we should make speedy progress towards privatisation. What both the Select Committee in its report and the Government in the White Paper have emphasised is that we are dealing with the marketplace. One can analyse and make predictions

about the marketplace, but in the end one is dependent on customers. British Coal must now, with the advantage that we have given it of being able to compete at world market prices, secure that market. We shall give British Coal every help in doing that.

Sir Harold Walker: Did not the Select Committee make it clear that its recommendations should be taken as a comprehensive whole? It is therefore wrong for the Secretary of State to pick the bits that suit his case and then to claim to support the report. Is he aware that his statement today is an economic disaster for Doncaster? He talks about the marketplace. I am concerned about the job marketplace in Doncaster through which the right hon. Gentleman has driven a big hole today. He spoke in October about the support that would be given to areas affected, yet we have seen none of that yet in my area. When will we get that support? What does he intend to do about the disaster that he has created for my constituency?

Mr. Heseltine: I think that I can help the right hon. Gentleman. I am very concerned to ensure that where closures take place, there is the help that I have announced. It is self-evident to those who understand these matters that no one is allowed to prejudge consultative procedures that are under way. Until British Coal comes to a conclusion, through the consultative processes, about the way forward, we do not know exactly what closures will take place. It is therefore not possible to anticipate and to start spending money.
The House will understand that one of the great advantages of Select Committees, which I strongly supported when they were extended in 1979–80, is that they can range over a subject and put forward many different proposals. The Select Committee on Trade and Industry has done a commendable job. However, nobody believes that a Select Committee is a substitute for Government. We have to study the Select Committees' proposals and we have to take the decisions. There are often lonely questions about the allocation of priorities. I hope that, on reflection, the Select Committee will feel that its work has been taken extremely seriously.

Sir Michael Grylls: Does my right hon. Friend accept that his statement proves that the Government are determined to do all that they can to help the British coal industry—whether it is in the private sector or the public sector—to become competitive so that it can supply coal to the market at the price that the market demands? Will he ensure that the subsidies are prudently spent, because they come from taxes paid by other successful businesses throughout the country? It is very important that they are spent carefully.

Mr. Heseltine: My hon. Friend is absolutely right. He addresses the central issue that faced me last October and has faced my colleagues ever since. If my announcement leads to extra contracts, it will cost the taxpayer hundreds of millions of pounds. We will therefore ensure that the negotiations that lead to such potential are carefully and rigorously conducted and that they are of a tapering nature to ensure that British Coal continues to have the incentive to improve productivity.

Mr. Richard Caborn: Will the President of the Board of Trade, through the usual channels, allow a debate on Monday not just on the White


Paper but on the 39 recommendations made in the Select Committee report to give the House the right to make decisions on them? I am concerned that, after six months of delay by the Government—the President of the Board of Trade knows that the Select Committee report was published on 29 January—we are now to be forced to debate a serious issue in an unacceptable time span of about 48 hours. I ask the usual channels to allow a little more time not only for the House to reflect on the issue, but—[Interruption.] As the President of the Board of Trade has raised the subject of the Select Committee report, and if it is not too much for Conservative Members to listen, the Chairman of the Select Committee has the right at least to put down one or two markers.
May serious consideration be given to the report to allow the nation time to reflect on the content of the 152-page White Paper, which will be debated on Monday? My quick analysis—and it has been quick—of the main provisions of the White Paper suggests that all 31 pits will be closed in the next three or four years. That will cost the British taxpayer about £2 billion. Eighteen of those pits and 18,000 jobs will be lost this year alone. This package is merely a change of tactics—[HON. MEMBERS: "Ask a question".] I want to deal with the points that the President made—

Madam Speaker: Order. I know that the hon. Gentleman heard me earlier when I reminded the House that hon. Members should not ask questions. A debate will be held on Monday. We want to hear the hon. Gentleman put his question to the President of the Board of Trade.

Mr. Caborn: I will ask the President of the Board of Trade specific questions. Why has he, again, failed to question whether there is a larger market for coal—the very question he posed to the House on 21 October? Why has he chosen price support for British Coal in the full knowledge that his proposals do not provide the market beyond the 40 million tonnes this year and 30 million tonnes in the subsequent four years? Why has he not answered the Select Committee report, which addressed the question whether there is a larger market for coal? Will he now answer questions on the licensing of gas, on the baseload of gas, on the letter that I wrote to him about EDF and on opencast mining by British Coal and the private sector? Why has he chosen not to comment on the franchising of the regional electricity companies—which is mentioned in the report that he has ignored—which would make a further market for 20 million tonnes? The right hon. Gentleman has ducked those questions this afternoon, but he should answer them.

Mr. Heseltine: The hon. Gentleman, who, as the House knows, is Chairman of the Select Committee on Trade and Industry, misunderstands the nature of what I have said today. While it is entirely for my right hon. Friend the Leader of the House to determine the subject of the debate, within my White Paper there is reference to every recommendation of the Select Committee and a Government response to it. It would be difficult for us to debate the issue without referring to the Select Committee report. We are under pressure to make progress on the matter because the contracts for British Coal run out on 31 March, so there is great uncertainty in the industry and it is important that the House has an opportunity to debate the matters.
The hon. Gentleman mentioned the central issue, to which I have referred many times already—the market-place. As I understand it, the view of the Select Committee about the market place is that we should do certain things to expand it, some of which I have been able to do in part. Secondly, it recommended that we should provide a subsidy to enable British Coal to obtain part of the additional market space. I have accepted that recommendation. It named certain rates of subsidy that might be necessary and I have already said that I am prepared to embrace figures broadly in line with those of the Select Committee.
The only issue is whether I could have been expected, by now, to have seen British Coal sign up the additional contracts. The Select Committee never told me to come back to the House with signed contracts. It told me to allow British Coal to go out and negotiate for contracts. That is what I have announced that I shall do.

Sir Trevor Skeet: I congratulate the President of the Board of Trade on maintaining a competitive energy industry and on his recognition of the fact that it is no good curing unemployment in one industry only to create it in another. Will he keep a watchful eye on coal stocks which, at 45 million tonnes, are excessive, so as to ensure that they do not deteriorate and go to waste?

Mr. Heseltine: My hon. Friend touches on another central dilemma in the debate. It is that it is often a question not of protecting jobs in general but of protecting jobs in one industry or another. The more that one chokes off the market to enable coal to fill it, the more one destroys jobs and confidence in a range of alternative industries, many of which are doing extremely well. The House will have recognised that I have today announced the go-ahead for a project with which 5,000 jobs are associated. It is very much a question of priorities, but British Coal now has a chance to compete in the market place with a product that is priced competitively.

Mr. Tony Benn: Is the Minister aware that what he has done today is to confirm unemployment for between 80,000 to 100,000 people and condemned to death the communities whose pits will close at a time of mass unemployment and that, for those people, his statement will have been the most cynical, arrogant and inaccurate that has been heard in the House for many years? That is so not least because the aim of the interconnector with France was to export British coal to France. As he knows, that is the purpose. The Labour Government launched the Selby coalfield and authorised the Drax B coal-fired station.
The most dishonest thing of all is that the money that was supposed to be given to help the areas has been diverted to subsidise the pits for privatisation. When private owners buy pits, they will find them already subsidised. If the Minister is interested in history, will he look back and find that, when the pits were last privately owned, in the 1930s, 1,100,000 miners were injured and 7,800 killed?
The amount of money made available, allegedly to help that group of people whose livelihood is ended, contrasts with the £10 billion made by market forces when the currency collapsed last September. The Minister has made an utterly unacceptable statement and, apart from the


cheering crowds behind him, nobody in the country will believe that he has done anything but confirm the betrayal of his earlier statement.

Mr. Heseltine: When the right hon. Member stands before the House and says that really what the EdF deal was about was exporting to France—he nods his head—I can only ask the House who is misleading whom. I will quote from Hansard. The right hon. Member, when he was in power, said:
The link will add to the security and diversity of the CEGB's sources of electricity".—[Official Report, 3 August 1978; Vol. 955, c. 546.]
Who, I ask again, is misleading whom?

Sir Cranley Onslow: I assure my right hon. Friend that, just because an hon. Member happens to be Chairman of a Select Committee, that does not mean that he owns the Committee or speaks for it. As a member of the Select Committee, I can assure him that some of the criticisms which the hon. Member for Sheffield, Central (Mr. Caborn) has levelled at him are not shared by the majority of the members of the Committee. We are very willing indeed that this matter should be debated as soon as possible so that we have an opportunity to emphasise what really matters. British Coal must save itself by its exertions and my right hon. Friend has given it the opportunity, with privatised industry, to do just that.

Mr. Heseltine: My right hon. Friend has been immensely helpful to me in advising me on many matters in this connection. I believe that the views that he has expressed represent the views that anyone reading the Select Committee report would form. I very much welcome the fact that the Select Committee said as clearly as it did—and, in the report it published, as fairly as it did—what the reality of the opportunities was.

Mr. Kevin Barron: May I ask the President of the Board of Trade what I should say to my constituents who work at Maltby colliery, the most modern deep mine single complex in Europe, which has just had £190 million spent on it, now that it has been announced this afternoon that the work force is to be sacked?

Mr. Heseltine: The hon. Member should tell his work force that we intend to put the pit into a development phase in which £30 million of taxpayers' money will be invested in order to carry on the life of that pit into the next century. If the hon. Member would look to the positive opportunities and stop trying to undermine every opportunity created, his constituents would be better off.

Mr. Winston Churchill: I thank my right hon. Friend for the very considerable distance that he has travelled since 13 October last year. Can confirm that the purpose of providing a short-term subsidy to these 13 pits is to put them in a position to carry forward into the future once they have reached world market prices, and that he and the Government will use their best endeavours to help carve out a wider market for coal? Specifically, can he undertake that the Government, once there is a new French Government in place in Paris, will conduct political discussions at the highest level in order to arrive

at a situation in which there is a more neutral flow across the interconnector and for exploring the prospects for exports to third countries?

Mr. Heseltine: My hon. Friend has taken a particular interest in this matter and I am most grateful to him for what he has now said. Within the legal constraints which I have explained to the House and on which I have taken advice, we are in discussion with the French Government. This is not, perhaps, the best moment in history at which to pursue these discussions, but I certainly give my hon. Friend the assurance for which he asks: they will be continued. We have seen some welcome developments since these discussions got under way and my hon. Friend has played a conspicuous part in that.
On the central issue which my hon. Friend put to me, we are trying to give British Coal the opportunity to seek out these additional markets, partly because we have been able to show where some of those markets will be and partly because the generators are now saying that they wish to negotiate supplemental contracts over and above the base contracts which have been concluded effectively today. So the only lasting position for their future is to seize that opportunity at a moment when there is a drive to competitive positions.

Mr. Doug Hoyle: Does the President of the Board of Trade realise that his statement today does nothing for the long-term energy future of this country? Nor, indeed, does it do anything to save Parkside, the last pit in the north-west that is viable and has long-term reserves. What has happened to the right hon. Gentleman's promise to intervene? Does he no longer eat breakfast, lunch and dinner? Does he not realise that his reputation and career are in tatters?

Mr. Heseltine: The pit to which the hon. Gentleman refers is one of the 10. He will know that it is now subject to consultation and it would be inappropriate for me to comment on it. If British Coal is determined to proceed to closure, there will be an opportunity for the private sector to make arrangements to take it over.

Mr. Tom King: While everybody regrets the loss of any jobs, particularly in the mining industry, is not the truth that no Government of either party has been able to guarantee jobs in the mining industry, an industry which as recently as 1955 employed no fewer than 750,000 people, and that the only guarantee comes from the level of the market?
Does my right hon. Friend accept that his statement will be seen as a genuine and thorough attempt to give the coal industry the best chance for the future without undermining the competitive position of the rest of British industry? Will he also give an assurance that the energy market, the review of the Magnox stations and new investment will be looked at fairly, on their merits?

Mr. Heseltine: My right hon. Friend knows a great deal about this market and I can readily give him the assurance that he has sought. I am grateful to him for the way in which he has described the work that we have tried to do. This is about an opportunity, but I think that British Coal is only too anxious to respond to that opportunity. Some of the recent productivity gains that have been achieved will help them on their way.

Mr. Dennis Skinner: Is the Minister aware that he has just delivered a confidence trick that would have done Paul Daniels proud? This is set against a background of more than 4 million people out of work, so I plead with the Government not to weep crocodile tears today about unemployed people. More than 50,000 people will lose their jobs in the mining industry and elsewhere as a result of this statement. The Minister said that his hands were tied, but if he had taken the import levels back to 1979 and the opencast levels back to 1979—he always quotes that year—and if he had stopped orimulsion, he would have saved 25 pits. If he got rid of the Magnox nuclear reactors he would save another five pits and if he had had the guts to say to the French that we were not going to have their electricity sold here in Britain, just as the French are saying that they will not buy our fish, we could have saved another six pits and thus saved all 31.
The truth is that we are faced with a gutless and spineless Government who should be got rid of as soon as possible.

Mr. Heseltine: The real question for the hon. Member is, what was he doing before 1979 pursuing policies, the logic of which we are discussing today?

Mr. Tim Devlin: Is my right hon. Friend aware, that since this review began, not one new exploration platform has been authorised for the North sea and not one new platform has been commenced at any yard in the north-east of England? While all of us in the north of England want to save the coal industry in our part of the country, by any means that we can, we also realise that the benefits of the future rest on the North sea and the riches that it possesses, and we look forward from today's statement for a further development there in the very near future.

Mr. Heseltine: My hon. Friend comes to the heart of the matter. The announcement I made today about Connah's Quay is very important to British industry. Creating jobs there might have a very attractive long-term potential, for work not only in the North sea but in the international exploration industry.

Mr. Greville Janner: Why did the President of the Board of Trade studiously ignore, in his statement, the unanimous report of the Select Committee on Employment on the employment consequences of the pit closures? Could it be because it was the unanimous view of all the members of the Committee, whatever their political views, that both the true national costs and the social effects of pit closures should have been, and were not, taken into account and that no pit should be closed, unless and until there has been full consultation and complete consideration of all the factors in that unanimous report, and every effort had been made to safeguard not only the miners concerned, but the other affected workers, of whom there are twice as many?
Why did not the Government permit their response to the report to be made available to members of the Committee until after the President had sat down, when the report was placed in the Library? Could it be because the Government's response to the unanimous report included this disgraceful sentence:
The Government considers that the estimation of the financial costs of unemployment referred to in the Select Committee's conclusions would not be meaningful"?
Surely it is meaningful that there are national costs, personal costs, social costs and misery in the devastating effect referred to in this unanimous report on all the pit closures. Will the President please consult the Employment Secretary and come back with a worthy reply that will help the people whose lives will be wrecked by his statement?

Mr. Heseltine: The hon. and learned Gentleman will know that my right hon. Friend the Secretary of State for Employment has replied to the Select Committee's report—an entirely proper course. Let me take one central issue. When jobs are created, very few people go round multiplying the number by three to indicate the number of potential jobs in the economy. However, when jobs are destroyed, people immediately multiply the number by three in order to show the harm that is being done. In my view, in both cases people are likely to be far short of the real world.

Mr. Michael Alison: Does my right hon. Friend recognise that the new hopes and the new opportunities that his statement gives to British Coal as a whole will be even more advantageous to the low-cost, high-productivity, Conservative-financed pits, such as the Selby complex? Does he recognise that he may even have underestimated the scope for exporting British coal to Europe, particularly from pits like Selby, where the cost of production is already at the low world-cost level?

Mr. Heseltine: My right hon. Friend has a deep interest in the matter. I am very well aware of the excellence of the Selby pit. British Coal is now beginning to achieve remarkable advances in productivity. The sad reflection—indeed, the tragedy that lies behind this entire debate—is that, if there had been such achievements years ago, we should be having a very different sort of debate today.

Mr. William O'Brien: What we have had from the President of the Board of Trade today indicates that he has no knowledge of the mining industry. The fact that he has named Sharlston colliery—my colliery—for early closure amounts to a stab in the back for 700 men who work at that pit. Will the President of the Board of Trade explain to those men why, with the fuel fossil levy that all of us pay through our electricity bills, which will be 10 per cent. of the total account from next April, they cannot have a share of that levy to help save the pit? The reserves are there. What we need is investment and a visit to Sharlston by the President of the Board of Trade to hear what the men have to say about his decision to close their pit early.
Will he also explain why, in an area where there is to be early closure of pits, assisted area status is not being afforded to the local authority? What we are witnessing is a stab in the back from the President of the Board of Trade for miners in general, but for Sharlston in particular.

Mr. Heseltine: The hon. Member will be fully aware that decisions about moving a pit to closure are a matter for the board of British Coal. It is a little unwise of the hon. Gentleman to suggest that the members of that board do not bring a very great degree of expertise to such matters. It would not be appropriate for me now to comment on the individual pits that are the subject of this announcement. [HON. MEMBERS: "Why not?"] Because they have to move to statutory consultation procedures. That is a matter for British Coal to continue, which is what it will do.

Mr. Richard Alexander: Is my right hon. Friend aware that, despite the decision to locate the headquarters of the energy commission in Nottinghamshire, the pit closure programme that he has announced today will cause devastation in north Nottinghamshire, particularly at Bevercotes, where I have 500 constituents who will be out of work immediately? Does he recollect giving an undertaking to the president and secretary of the UDM that he would do everything that he could to keep UDM pits open? [Interruption.] How does he square that with the fact that, at the end of the day, only three of the formerly seven UDM pits will remain open?

Mr. Heseltine: I am aware of the acute interest that my hon. Friend has in today's announcement. It is not possible for me or British Coal to distinguish between pits on the basis of which unions happen to represent them. We are acutely aware of the remarkable contribution that the UDM made towards the advances of the industry in the early 1980s. While that is true, it is not a factor that can enter into the consultative procedures.
My hon. Friend said that there would be an immediate change and people would lose their jobs. That is not the case. The procedure is that the pit moves into a closure consultation procedure, not for closure, but for a regime of care and maintenance, so that, if the market should prove to be even larger than we are talking of in respect of those that remain open, there is the possibility of reactivating the pits.
But should Bevercotes move through the consultation procedures and as a result British Coal decides that it should close, at that stage there would still be the opportunity for the private sector to make an offer to take it over.

Mr. Ted Rowlands: Is the right hon. Gentleman aware that, if Taff Merthyr colliery closes, it will be the end of one of the greatest and proudest traditions, the end of mining in the Merthyr valley, even though that valley has more than 20 per cent. of men out of work and another 20 per cent. economically inactive? We passionately believe that we have economic reserves that could go to a power station no more than 15 miles down the road by direct rail line. Will the so-called consultation procedures now allow us to put before an independent review body the case that we want to make for Taff Merthyr colliery?

Mr. Heseltine: My reply to my hon. Friend the Member for Newark (Mr. Alexander) is relevant to the questions that the hon. Gentleman is asking. If British Coal determines that the pit should close, it will be available for sale to the private sector. It is already in the consultative process and it would not be right for me to interfere in that process. Anyone who knows south Wales as well as the hon. Gentleman does—and I have some knowledge of the area—knows that there has been a dramatic rundown in the coal mining industry in recent years, a wide diversification of the Welsh economy and a substantial improvement in prosperity as a result.

Mr. Michael Jopling: Is my right hon. Friend aware that few fair-minded people will wish to argue that he and the Select Committee have not worked extremely hard to find as good a future for the coal industry as is reasonable? How much will the package

that he announced today cost the taxpayer? He said that it could cost several hundred million pounds. I am sure he had to be more specific than that with the Treasury. How much is it likely to cost, and did the Chancellor of the Exchequer include that sum in the PSBR estimates that he gave in the Budget last week?

Mr. Heseltine: There is a complication about the questions that my right hon. Friend asks. I cannot know what level of contracts will follow from the opportunites that I have created, so I have given an indication. The Select Committee mentioned rates of subsidy that would, in its judgment, take the price of British coal from the present production costs to world market prices. The language that I chose, to indicate as much support as I could, was that I would embrace the range of figures that the Select Committee had given.
But I am not prepared—the House will understand—to put a sum of money on the table in public, because we are negotiating with private sector companies, which have their own self-interest for which to negotiate, and the moment they see our price, they will seek to increase it or to give less for it than we would wish to achieve.
While I have discussed this matter fully with my right hon. Friend the Chancellor of the Exchequer, it would be naive to put one's negotiating cards face up on the table.

Mr. Lawrence Cunliffe: Why does the right hon. Gentleman not accept what every financial fuel consultant and accountant in the energy industry accepts, that the aging Magnox power stations are the most expensive fuel on base load for the electricity grid? [Interruption.] Hon. Members can say what they want. It is a fact. Why does not the right hon. Gentleman understand that even half the £1,270 million subsidy to the nuclear industry, which is roughly the amount that should have been given in an answer to the hon. Gentleman from the Chancellor of the Exchequer, or about £500 million, would save seven collieries, not only in the short term but guaranteeing their long-term security for nearly 15 years?

Mr. Heseltine: On reflection, the hon. Member may feel that he has not totally reflected the situation as it is. British Coal today is coming to the end of a contract which was worth something like £1 billion a year to it in the prices that it was receiving, over and above the market price of coal. In addition, as my right hon. Friend the Prime Minister said during questions, about £18 billion has been put into the industry since 1979, so there is no question but that the coal industry has received, and is receiving, substantial subsidies.

Dr. Keith Hampson: Is my right hon. Friend aware that all the members of the Select Committee agreed that there were severe limits on how far one could extend the coal-generated electricity market? There are no easy answers such as the acceleration of the closure of Magnoxes. The 16 million extra tonnes we thought might be possible could not be written in stone, simply because it was predicated on a total closure of the French link. Will he therefore confirm that, in offering his subsidy to British Coal, he is seeking to increase the market in that range of 12 million to 15 million tonnes a year, and will he confirm that to bring the price of British coal down to import price levels, it is vital that the productivity of British pits is enhanced as quickly as possible? That will need assistance from the House,


enabling British Coal to improve management practices and working practices in the pits and enabling the private sector to do a better job than it otherwise would do.

Mr. Heseltine: As a member of the Select Committee, my hon. Friend knows a good deal about the subject. He is right to point to the essential need for British Coal to achieve its productivity levels, not just in the pits but in the management of individual pits and in headquarters staff. These gains must be achieved if there is to be a competitive future for British Coal. I am assured by the management of British Coal that it intends to move forward with dispatch in this direction.
My hon. Friend then asked whether I would give a broad indication of market. I would have to say, having looked at the Select Committee report, that even if one takes out the calculations included for EdF, the assumptions of the Select Committee are still at the top end of the range. They are significantly above, for example, what my own consultants, Caminus, indicated and Caminus are above what British Coal indicates as the likely market, so there is a judgment to be made. The only way to determine the market, however, is for customers to sign contracts, and the customers in this case are bound to be, significantly, the electricity supply industry. It has its own views of what the market will be. It is only on that view or any other market that we can find that contracts will be forthcoming.

Mr. John Evans: Is the President of the Board of Trade aware that 800 miners and their families at Parkside colliery in my constituency will have listened to his statement today with anger and dismay? In a 20-minute presentation to the House, he said not one word about Parkside and the other nine collieries which, it would appear from his statement, are doomed. Will he confirm that British Coal is determined to close Parkside colliery, a colliery that has been profitable in each of the past six years, and throw 800 miners on to the scrap heap in an area where there is already more than 15 per cent. unemployment, at considerable cost to the taxpayer? Is it not a fact that the short-term fix that he has offered to the House today will do nothing for the British mining industry and, in fact, seeks to save his own job?

Mr. Heseltine: The hon. Member will be aware that 30 per cent. of the miners from Parkside have already accepted since last October the redundancy terms that we have made available to them. [Interruption.] He will also be aware that the reason why I did not mention the 10 collieries in my statement is that they are subject to the procedures of consultation and it would be wholly inappropriate for me to refer to them.

Mr. Patrick Cormack: In view of the immense time and trouble that my right hon. Friend has taken to produce this report, for which I thank him, and in view of the detail that it contains, would not it make sense if we debated it slightly later next week, when people have had a chance to digest it and make representations to hon. Members? If we were to debate it on Wednesday or Thursday, it would still be before Easter.

Mr. Heseltine: My hon. Friend raises a matter that is essentially for my right hon. Friend the Leader of the House. I must allow him to judge the order of priority of Government business.

Mr. Joseph Ashton: Is the Minister aware that he has offered nothing to the coal-mining industry today? Will not the subsidy simply come out of the VAT that is to be levied on electricity in a year's time? Will that subsidy simply go to encourage the privatisation people, who will come into the industry to try to lower wages arid make miners work longer hours and then, if the miners refuse, close the pits because they are not interested in digging coal, but rather in getting cheap land, railway sidings, the property, everything else that is attached to a pit—

Mr. Eric Clarke: Yes, and miners' pension rights.

Mr. Ashton: And pension rights, as my hon. Friend says. They will use his subsidy to make massive profits without producing one extra tonne of coal.
Why has the right hon. Gentleman said nothing about assisted area status? He quotes 1979, when my area was given assisted area status by the Labour Government, but his Government took it away, with no promise at all of ever putting it back.

Mr. Heseltine: I assure the hon. Member that there will be no threat to any pension rights of any miners in whatever circumstances develop. [Interruption.] The longer Labour Members tell their constituents the sort of things that we are hearing in the House, the longer the threat to British Coal will exist. If we had faced the need to modernise the coal industry throughout the early decades of this past half-century, we would have seen the coal industry of this country enjoying a far larger market than it currently does. It is because the Labour party told them that there was some other way that we have delayed making many of these difficult decisions.

Mr. John Butterfill: Does my right hon. Friend accept that the Select Committee will wish to study in some detail the White Paper that he has presented to the House today? We are all very grateful that he has accepted our principal recommendation, that British Coal be given a subsidy to enable it to become world-competitive over the next few years. As my hon. Friend the Member for Leeds, North-West (Dr. Hampson) said, that will require considerable productivity gains. While we accept that he has done a great deal to try to influence the French, will he also accept that, whatever the legal technicalities may be, it is not really acceptable in terms of Community spirit that the traffic across the interconnector should be all one way?

Mr. Heseltine: My hon. Friend is right. I can assure him that, of all the subjects we have had to look at in the context of this review, it would be fair to say that the interconnector has taken a disproportionately large amount of time. It merited a great deal of time, and I was the first to recognise that, but I had no choice but to publish for the House the summary of the legal opinions—because I did not rely on one alone—that I was presented with. I could find no way through and I have published it for the House. So one must adopt the only alternative route, which is to discuss the thing with our French opposite numbers. This my hon. Friend the Minister of State has done, and I believe that we will have an improved position as a result.

Mr. Adam Ingram: Is it not the case that the President of the Board of Trade inadvertently misled the House this afternoon when he said that he had considered every recommendation of the Select Committee report? Having read through it very quickly, I do not think that that is the case, and the record will prove different. Is he aware that Scottish Power and its Scottish consumers take a disproportionate share of the sulphur dioxide emission reductions? What guarantee can he give Scottish consumers that their electricity prices will not go up and that they will not be further disadvantaged by his statement today?

Mr. Heseltine: I hope that the hon. Gentleman is wrong; certainly, he is describing something entirely different from my intention. I have assured the Select Committee, and instructed my Department, that I want the White Paper to respond thoroughly and comprehensively to the report that I have praised in the House. I believe that the White Paper covers each of the Select Committee's substantive recommendations. Of course, we shall debate these matters further; if the Select Committee wishes to pursue them with me in its own way, it is fully entitled to do so and I shall co-operate.
The hon. Gentleman asked me for assurances about future prices. That is not a realistic question to put to a Minister, who cannot be expected to give hard and fast views on prices in a complex marketplace without any time constraints.

Mr. Michael Spicer: Opencast coal is cheap and sulphur-free; there are large stocks of it and, when blended with deep-mined coal, it greatly improves the marketability of such coal. Will my right hon. Friend tell us a little more about why he believes that production of opencast coal will fall from 16 million tonnes a year to 12 million?

Mr. Heseltine: I have consulted British Coal about that. As I said in my statement, in evidence to the Select Committee, British Coal anticipated that the present output of 16 million tonnes would fall to 12 million; it now believes that it will fall further.
I appreciate the considerable advantages of opencast mining, particularly in derelict land reclamation. I also understand the arguments for fuel mix, which render opencast coal especially important in terms of both price and technical qualities. There is another side to the matter, however. My right hon. and learned Friend the Secretary of State for the Environment will this afternoon publish his planning guidance, which suggests that the environment and its protection must also be weighed in the balance. It is on that basis that judgments can be made in the future.

Mr. Eric Illsley: Is it not the case that 12 pits will close now, six will be mothballed—which means that they will never open again—and one, Maltby, will gain development status? Nineteen pits will be closed, while 12 will not be subsidised for two years, until the union members accept the redundancy terms that they will be encouraged to accept during that period.
The right hon. Gentleman talks of the market and the loss of the market. Has not the market been rigged against coal ever since privatisation? Gas-fired stations can bid into the pool at a negative price: in other words, they bid their electricity into the pool at nothing, knowing full well

that they will then be brought on to the grid. They must compete with orimulsion—which can be piped in for next to nothing because it comes from Venezuela—and with opencast coal. Such coal is not from derelict sites; 93 per cent. of it comes from green field sites that are left as green field sites afterwards. It is a rigged market, and the right hon. Gentleman knows it.

Mr. Heseltine: I know that the Select Committee raised some aspects of the hon. Gentleman's point, but, although the Committee asked me to examine the question of bidding into the pool, I felt that it was not convinced that a simple solution existed. Having considered the issues, I concluded that the Committee was right to have its doubts.
I wholly reject the suggestion that the market is rigged. As I said in my statement, even if British Coal secures no further contracts, it will still be a substantial company in world coal terms. That in itself is an opportunity. I also wholly reject Labour's defeatist view that when I accept the Select Committee's recommendations, I enable British Coal to negotiate for additional markets. The thrust of Labour's view is that there is no additional market, but I do not accept that.

Mr. Rod Richards: Is my right hon. Friend aware that his statement will be widely welcomed in north Wales, especially by those who work in Point of Ayr colliery? Is he further aware that the section 36 consent that he has given to the Connah's Quay power station heralds a new economic era for north-east Wales, generating thousands of jobs and many hundreds of millions of pounds in investment?

Mr. Heseltine: My hon. Friend is absolutely right. The Connah's Quay announcement is a good one. Along with my right hon. Friend the Secretary of State for Wales, my hon. Friend will know better than most that we went through a similar difficult readjustment in the context of Shotton. Without doubt, the Shotton area has experienced a transformation as a result of investment and diversification. We must always look at how we can help declining industries to reach a position where new jobs, investment and companies and a better future are on offer.
My hon. Friend is absolutely right to point to Connah's Quay. Not only will it help jobs in north Wales, which is extremely welcome; it will be a signal to one of Britain's most successful industries.

Mr. Geoffrey Hoon: The right hon. Gentleman seems to be keen on quotations. May I draw his attention to page 68 of the White Paper, which states:
The United Kingdom undoubtedly has the lowest cost coal in the Community.
How will the Secretary of State explain to the miners of Silverhill—whom he appears today to have finally condemned to lose their jobs—that the German, French and Spanish industries will continue to produce 100 million tonnes of coal? Why are those countries' Governments so successful at subsidising their industries, while our Government sell our miners so short?

Mr. Heseltine: I am afraid that the hon. Gentleman is misinformed about what is happening to the coal industry in Europe. I, too, have looked at the figures and perhaps on Monday we shall have a chance to debate these matters. By and large, the coal industry is in decline across Europe and in Community countries such as ours.

Mr. James Pawsey: Can my right hon. Friend elaborate on the part of his statement that referred to privatisation? Can he say what interest the private sector has displayed in acquiring the pits that it is proposed to mothball? How many pits will be involved and how many jobs?

Mr. Heseltine: It is encouraging that we have received a number of inquiries, but it is fair to add that, at the stage that we have reached, such inquiries are bound to be tentative. My hon. Friend the Minister of State, in partnership with British Coal, hopes tomorrow to see a number of people who have approached us in the context of privatisation.
I very much hope that, as the position has now been clarified, we shall be able to see how far the interest that has been expressed can be extended. As I told the House, I have announced £ million of Government support for those who want to prepare management buy-outs. As I have said before, I do not wish miners to buy into pits that have no significant future, as an emotional reaction to admittedly traumatic circumstances. I shall do my best to warn them of the difficulties; I think that that is only fair.

Mr. Michael Clapham: Today's statement shows that the President of the Board of Trade has not been listening and has not been reading. He talks of the subsidy. The Select Committee suggested that the subsidy paid to British Coal as price support should be paid within the context of the franchise market, but there has been no mention of the franchise market. Has the right hon. Gentleman explored the possibility of extending that market? Has he examined the other recommendations to which my hon. Friend the Member for Sheffield, Central (Mr. Caborn) referred? Has he looked at the conclusion of the Select Committee report, which states that there is a substantial market in excess of that which the Select Committee recommended for price support?
The Committee's recommendations add up to a market of 62 million tonnes, enough to keep all 50 collieries working. It should be borne in mind that seven of those collieries will be exhausted in the next five years. Will the right hon. Gentleman confirm that his recommendations, and today's statement, have more to do with preparing the industry for privatisation than with developing an energy policy?

Mr. Heseltine: Preparing the industry for privatisation is a very important part of an energy policy. I believe that, with hindsight, that will prove to have been the case with coal, as it has proved in so many other privatised industries that have been able to develop potential in the private sector that they were denied in the public sector.
I have considered the protection of the franchise, but I decided that it would not increase the size of the available market. I have said that the subsidy that we are prepared to make available is not dependent on extending the market. It is an offer that British Coal and the private sector—if it can find additional markets—are now able to exploit.

Mr. Barry Porter: I am the one member of the Select Committee who did not vote for its report, on the basis that I thought that the extension of the market was on the optimistic side. I am grateful, however, to my right hon. Friend for dealing in detail with the

Committee's recommendations. His response has been extremely realistic and sensible. I wish to thank him especially for the decision that has been made in respect of Connah's Quay and gas.
We must accept that there will be severe social difficulties in the mining communities. Will my right hon. Friend examine again, in the context of the entirety of the White Paper, what redundancy payments can be made to miners? Bearing in mind that it must be accepted that jobs will go, let us make the terms of redundancy as sensible and remunerative as possible, as we did for the dockers in days gone by.

Mr. Heseltine: I am grateful to my hon. Friend. I hear what he says about not having voted for the central recommendation contained in the Select Committee's report. As I have done my best to praise that recommendation, I hope that he will not hold that against me when it comes to any decisions that the House might have to make.
The redundancy scheme that I announced last year is a generous one. It is almost without parallel anywhere else in the public or private sectors. It would be to let down the members of the coal industry who have accepted it over the past few months if I were now to increase the payments. The Government have no plans to increase the level of the already extremely generous redundancy scheme.

Mr. Mark Fisher: As the President of the Board of Trade has not mentioned the 10 pits that are to be closed, will he undertake to return to the House to make a further statement, or are they condemned to closure in silence? Does not he understand that the deep anger that people expressed following his closure statement in October 1992 will be refired and redoubled by his statement today? Last October, the British people expected the right hon. Gentleman to work for a proper, unrigged market for coal and an energy policy that made use of all our assets. What they have instead is a political stitch-up that will destroy industry and create only unemployment. Does the right hon. Gentleman realise that the British people will not forget the smirk that played over his face when he answered questions following a statement which condemned hundreds of thousands to unemployment in the years ahead? He smirks and they will suffer.

Mr. Heseltine: When the hon. Gentleman and his colleagues can get elected to speak for the people of Britain, I shall listen to what they say on behalf of the people of Britain. I reject the sneering and contemptible way in which he has dismissed one of the best offers that I have been able to make to the coal industry.

Mr. Patrick Nicholls: Is my right hon. Friend aware that what he has said this afternoon will substantially reassure the many hundreds of people who contacted me in my constituency last year? Does he agree that there is a conclusion that they could draw from his statement and the evidence to which he has referred? That conclusion is that the economic analysis that my right hon. Friend made last year was right then and is right now. He has enabled those within the industry to face the consequences of that analysis.

Mr. Heseltine: Certainly, my hon. Friend is right. The decision that I announced in October 1992 was an extremely harsh one, and I felt anguish at having to make


it, but economically the arguments were clear. Public opinion took the view that it did. As a member of a democratic political forum, I would be the first to recognise the strength of public opinion in such circumstances. We have come forward, therefore, with a set of proposals that have the virtue of maintaining a realistic background but giving a new opportunity, at least in part, to significant parts of the industry. It is possible to do that only at a cost of hundreds of millions of pounds to the taxpayer. That means that other people in other industries will have to pay the bills that are necessary to make my announcement possible today.

Mr. George Stevenson: Does the right hon. Gentleman understand that as a result of today's announcement, which must be described as one of the greatest examples of industrial butchery that the country has ever seen, he will qualify his nickname of Tarzan to become the political equivalent of Hannibal Lecter? He never mentioned the unemployment that will be created when the measures contained in the statement are implemented. Similarly, he did not refer to the fact that he has been presented with effective arguments on behalf of the 10 collieries that are earmarked for immediate closure. Those omissions will be seen as nothing short of a national disgrace and a betrayal of his commitment to intervene in the market.

Mr. Heseltine: The hon. Gentleman has heard me say many times that I cannot comment on the 10 pits that are subject to the consultative processes. British Coal must undertake those processes and reach conclusions on the basis of them. I cannot interfere in that.

Mr. Jacques Arnold: May I welcome the emphasis that my right hon. Friend put on measures to help large electricity users? Is it not the position that excessive electricity costs in heavy industry, such as the Blue Circle cement works, Scotts and other plants in my constituency, put thousands of jobs at risk? We have heard nothing from Opposition Members about jobs outside the coal mining industry.

Mr. Heseltine: My hon. Friend, as I would expect, seeks to preserve the proper balance. A huge number of customers and a great deal of British competitiveness are at stake as a result of the issues that we are discussing. There is an important opportunity to enter into discussions—I cannot predict the outcome of them—with the large users.

Mr. Derek Enright: Did not the President of the Board of Trade have the opportunity to put in place a long-term strategy for energy? Instead, he has produced a mish-mash of contradictory tactics. I ask him a specific question concerning the 10 pits that are destined for closure. Bearing in mind the fact that the right hon. Gentleman has had much to say about the consultation process, will he condemn British Coal for announcing in its press release, on the day that it announced that it would undertake consultation procedures, that it would close all 10 pits? Will he defend the 10 pits from closure, or will he hand them over to his right hon. Friend Herr Himmler, the Secretary of State for Social Security?

Madam Speaker: Order. I am sure that the hon. Member will do the honourable thing and withdraw.

Mr. Enright: I shall certainly withdraw, Madam Speaker.

Mr. Heseltine: The hon. Gentleman may feel that his observations are not in keeping with the reality. He must be fully aware that I cannot and will not become involved in the slagging match that he requests over the management of British Coal.

Mr. Spencer Batiste: In his welcome and balanced statement my right hon. Friend spoke of the continuing negotiations between the generators and the coal industry and of the privatisation process. In that context, will he be encouraging those who will be seeking to put pits and coal-fired power stations together so that coal can have more direct access to the energy market?

Mr. Heseltine: My hon. Friend understands one of the potentials. It is not easy to see precisely how to bring about what he says, but it is something that is on the table for discussion. Many complex arguments are involved and I have had discussions which have focused on them. There are no announcements that I can make today.

Mr. John Cummings: Is the President of the Board of Trade aware that the consequences of the closure of the Vane Tempest colliery and the mothballing of Easington are not confined to the many tens of millions of tonnes of coal lying under the North sea, which will never be extracted by means of an opencast operation? In Easington, with a population of 20,000, 1,693 unemployed people are chasing 12 vacancies. It is clear that unemployment will rise to over 20 per cent. Does not he believe that there are markets around the Thames and in Europe and that we can provide the necessary resources—for the benefit of the people of Easington and of Europe?
Has the right hon. Gentleman applied himself to the question of the pumping arrangements that are absolutely necessary in the county of Durham to prevent an ecological time bomb from going off? Will he join me in applauding the magnificent efforts of the miners since October last year? They have broken all productivity records—a fact that the right hon. Gentleman failed to mention.

Mr. Heseltine: The hon. Gentleman will know that more than 51 per cent. of the miners in Vane Tempest have already gone. I believe that some of them have already secured alternative employment.
The hon. Gentleman has raised an important subject which I happen to regard as one of the most tragic aspects of this whole affair. In February, the shortest month, British Coal mined at an annual rate of 60 million tonnes, with 10 pits not coaling and with 9,000 fewer workers. Had that escalation of productivity been going on earlier, British Coal would have been incomparably more competitive. The longer the Labour party denies this, the longer they deny the spirit and determination of the miners, who have to go and negotiate the supplementary contracts that I am talking about.

Mr. Stephen Milligan: May I add my congratulations on my right hon. Friend's statement? I notice that it received a near-unanimous welcome among Conservative Members. It struck a balance between the


interests of preserving coal miners' jobs at a time of high unemployment and developing a real market which is in the interests of other industries. Does my right hon. Friend agree that it is hypocritical of the Opposition to accuse the Government of rigging the market when it is their policy to keep every pit open, regardless of the economics and even if the coal has been exhausted?
What would be the likely cost in terms of jobs in other industries and the likely bill to the taxpayer if we adopted the foolish policies of the Opposition?

Mr. Heseltine: My hon. Friend is right. The Labour party is talking the language of opposition. It never talked that way when in government, when it closed pit after pit—and Opposition Members know it.

Mr. Eric Clarke: May I put the record straight? I have fought the pit closures imposed by all Governments, including the Labour Government. I am here today to say the same as I told the Labour Government in the past.
I am disappointed. This has been a wasted opportunity to maintain a viable coal industry and the freedom to have cheap indigenous fuel. I must tell the right hon. Gentleman that many bitter people back home will not even be disappointed, because they are cynical enough to realise that he is going to sell them out. How can the Secretary of State claim to have negotiated? The Government own 100 per cent. of the coal industry and 40 per cent. of the electricity industry, yet they cannot do a deal. The right hon. Gentleman must be some Minister.

Mr. Heseltine: The hon. Gentleman illustrates the dilemma. I do not dispute his sincerity in fighting for pit after pit. The real test, however, is whether his colleagues, if they were sitting on the Treasury Bench and had to confront the decisions that I face, would have acted any differently. They did not—and the hon. Gentleman's remarks clearly show that, although he fought, he always lost.

Mr. Raymond S. Robertson: Is my right hon. Friend aware that he has today allayed the deep fears of tens of thousands of workers in the North sea oil and gas industries who know all too well that, had the Labour party had its way, the miners' subsidy would be their redundancy notice? Does he accept that I care just as passionately about the jobs in my constituency as Opposition Members care about the jobs in theirs? Just as it is unacceptable for them to tell their constituents to prepare for redundancy, it is unacceptable for me to go to mine and say the same?

Mr. Heseltine: There is no more eloquent case than the one that my hon. Friend has paraded. That is the dilemma. My hon. Friend represents a constituency at the heart of one of Britain's great industries. Am I to subsidise and keep going the pits, the effect of which will be to keep jobs in the pits which will be denied to the North sea oil industry? That is the choice; there is no escape from it. I therefore agree with my hon. Friend.

Ms Joan Walley: The right hon. Gentleman is the President of the Board of Trade. He has had 14 years to produce a coherent energy strategy, but none has been forthcoming.
Why has not the right hon. Gentleman mentioned what is to happen to the 10 pits earmarked for closure? How can he pretend that the contracting procedure is nothing to do

with him? He is the President. We need a proper energy policy. We do not want coal imports coming into our ports. We want a coherent opencast policy. What am I to tell constituents when they hear the results of this statement?

Mr. Heseltine: I think that I can help the House, because I have with me the "Plan for Coal" published in 1974—[Interruption.] This was the heyday of national planning; it was all about prediction—[Interruption.] I know that the Labour party does not want to listen, even though Opposition Members keep harking back to how they would have done things differently—forgetting what they actually did. So I shall tell them what they did. They published the "Plan for Coal". This is what it said—[Interruption.]

Madam Speaker: Order.

Mr. Heseltine: On second thoughts, I will forbear. There is a debate on Monday.

Mrs. Jacqui Lait: My right hon. Friend referred to special measures to help the large energy users. Has he any estimate of the number of jobs that would be lost in steel and chemicals if they were not recipients of energy at internationally competitive prices?
My right hon. Friend referred to the nuclear review. Can he give us an estimate of whether we can expect it this year?
As there is 14 per cent. unemployment in my constituency, can my right hon. Friend assure me that we will have a statement on the assisted areas map before we rise for the Easter recess—

Madam Speaker: Order. That last question is totally out of order. It should be addressed to the Leader of the House—if ever we get to business questions.

Mr. Heseltine: I can assure you, Madam Speaker, that I share your ambition to get to business questions.
My hon. Friend raises an important point about the large industrial users. They are a tough lot. They will tell me what they think potential job losses are. I have to stand back a little before accepting their forecasts hook, line and sinker, but I accept that there is a case. I intend to examine it in the way that I have described. My hon. Friend was right to bring it to my attention.

Mr. Harry Barnes: Today we have witnessed a performance by the Secretary of State and he has promised us another on Monday. It was silly, knockabout, political stuff when what we needed was an act of statesmanship. That is what my constituents, many of whom are miners, want for their future.
The Opposition, the Liberal Democrats, the Nationalists and the Unionists should unite in opposition to the White Paper measures, and we hope that those in the Conservative party who say that they are rebels will join us.

Madam Speaker: Order. Ask a question, please.

Mr. Barnes: If we unite against the proposals successfully, will the Secretary of State resign?

Mr. Heseltine: My job is always at the disposal of the Prime Minister.

Mr. Keith Mans: Will my right hon. Friend look again at the £95 million levy paid to EdF each year, with


a view to stopping this money being paid to the French until they make it clear that it is being used to pay for the decommissioning of their nuclear power stations, not to subsidise their operating costs?

Mr. Heseltine: Complex discussions about all these matters are being held with EdF, so I ask my hon. Friend not to draw me too far on that one. The discussions have moved in a positive way and I will continue to hold such discussions—I hope, with the new French Government.

Mr. Chris Mullin: Is the President of the Board of Trade aware that I have constituents working in four of the pits on his original hit list and that they will not be under any illusions as a result of the statement? We have heard the nonsense about care and maintenance before when the right hon. Gentleman's Department came for our shipyards. There is now a large, deserted hole in the ground where the shipyards used to be. Everyone knows that, to understand why we are in the current situation, we need go back no further in history than to the moment of electricity privatisation. Would it be in order for the right hon. Gentleman to say a small "Sorry" for that folly for which we are all now paying the price?

Mr. Heseltine: I am sure that the hon. Gentleman would wish me to convey his message to the 5,000 new job holders that I announced this afternoon.

Mr. Alan Williams: During the past week, the Government have tried to justify VAT on fuel in terms of energy efficiency. In that context, what sense does it make to be burning large quantities of our gas resources in power stations with 40 per cent. efficiency, when that gas could be used in our homes and factories with 80 per cent. to 90 per cent. efficiency? Is not today's statement a frittering away of our gas resources? Does not it sound the death knell of the coal industry which we will desperately need in the longer term?

Mr. Heseltine: That argument was carefully explored by the Select Committee and the hon. Gentleman will find that it did not accept his analysis. However, I am sure that the hon. Gentleman will recall that the Labour party and the whole House are committed to achieving our environmental targets. We cannot achieve those targets without taking decisions about constraints on energy use.

Mr. Gerald Bermingham: Will the right hon. Gentleman give me a little assistance? I represent a constituency which had two coal mines, at Bold and Sutton Manor, which have both now closed. The employees of those mines went to Parkside in the constituency of my hon. Friend the Member for St. Helens, North (Mr. Evans) which is now about to close. In other words, the mining fraternity has nowhere to go in St. Helens. Can the right hon. Gentleman tell me, so that I can tell them, what he is going to do for areas like St. Helens which have lost a whole industry?

Mr. Heseltine: What we did for Shotton, for Corby and for the whole of the south Wales mining industry. We will provide an opportunity for new investment, new jobs and diversity of hope and the opportunity to spread employment in a range of new industries that will cope with the market of tomorrow.

Mr. Boyce: Is the right hon. Gentleman aware that the people in the mining industry, in engineering and in all the other industries that will lose workers as a result of the plan are not the slightest bit interested in what happened 15, 20 or 40 years ago? They are interested in what will happen in the next six months. Is the right hon. Gentleman further aware that his squalid attempt to link the report of the Department of Trade and Industry with the report of the Select Committee, to which, after all, the Government referred the matter, fools no one? If he is serious about the Select Committee recommendations, why will not he follow the recommendation to return the 10 pits to coaling and go immediately into the review procedure? Or does the right hon. Gentleman not have the guts to do that?

Mr. Heseltine: I realise that it may be necessary for the hon. Gentleman to say those things. Of course the people who face the uncertainties and who may lose their jobs are not interested in what happened five weeks ago, let alone five or 15 years ago. That is not the real issue for the House. The issue is whether we should tell those people the truth and the truth was as clear and as truthful for the Labour party when it was in government as it is for me. I can no more save the industry artificially than the Labour party could when it was in Government. However, now that Labour is in opposition, it tries to pretend that that is not the case. If there has been a time when Labour refused to close pits because it had some magic way of saving them, I would listen to Labour Members. The Labour party has forgotten what it did.

Mr. Terry Lewis: The right hon. Gentleman will accept from me that it would be grotesque in the extreme if Parkside pit, in the constituency of my hon. Friend the Member for St. Helens, North (Mr. Evans), was closed while, at the same time, British Coal was allowed to opencast what is essentially a huge area of green belt in my constituency and that of my hon. Friend the Member for Leigh (Mr. Cunliffe) in the not too distant future.
The right hon. Gentleman's contribution on opencast was a little disingenuous. He talked about 17,000 people being employed in the industry. In most opencast sites that I am aware of, there is also a downside. Many industrialists and businesses go out of business as a result of the intrusion of opencast in their areas. In addition, areas with hugh opencast sites discourage inward investment. There are two sides to the story and I urge the right hon. Gentleman to take that into account.
The figures to which the right hon. Gentleman referred do not bear any relationship, in terms of tonnage, to the information given by British Coal to the Select Committee.

Mr. Heseltine: The information that I gave to the House was the information that I received from British Coal. Naturally, British Coal will read what the hon. Gentleman has said. However, with regard to opencast, I hope that the hon. Gentleman heard my words because, frankly, they were almost indistinguishable from the comments that he made.

Mr. Mike O'Brien: Is the right hon. Gentleman aware that up to 20,000 people in north Warwickshire face the threat of opencast and that 587 miners at Daw Mill pit face redundancy? If he really wanted to save miners' jobs, should he not have accepted


the Select Committee's plan virtually to halve the production of opencast by giving local people a veto—the right to say no to opencast?

Mr. Heseltine: The hon. Gentleman knows that we cannot just say that local people have the right to say no. There is no way of measuring how to judge the right of an individual to make such a decision, over a particular period or in which representative forum. We therefore have a planning regime. Hon Members will want to consider the new planning regime that my right hon. and learned Friend the Secretary of State for the Environment published this afternoon.

Sir Peter Emery: Having sat through all the questions this afternoon, may I ask my right hon. Friend whether he will accept the point made by the right hon. Member for Chesterfield (Mr. Benn), as I was the respective Minister before him? When the cable under the channel was first considered, it was to be introduced to bring electricity into this country for peak shaving purposes. Will my right hon. Friend also emphasise the fact that every Minister since Alf Robens has tried to present at the Dispatch Box a way in which the coal industry could save itself? That dates back decades. In my judgment, no Minister has tried, from the Dispatch Box, to put together a better package to assist the coal industry than my right hon. Friend has today.

Mr. Heseltine: Since I have been a Member of this place, I have been aware of my right hon. Friend's deep interest in and knowledge of the industry. I deeply appreciate what he said. We have done our best to respond to the work, which I have praised, of the Select Committee. We have tried to recognise that, in the end, it is about competitiveness and marketplaces, as the Select Committee indicated. We have given British Coal the best chance that we prudently think that we can, within the constraints of public expenditure, to go out and win a place in that marketplace. I cannot do more than urge hon. Members to encourage their constituents to recognise that there is a huge opportunity here, which is not to be disparaged or undermined by the language that Opposition Members have used to describe it.

Mr. Martin O'Neill: May I remind the right hon. Gentleman that, on 21 October, he said that he

would examine the ways and means to increase the use of coal? However, paragraph 31 of the report states that the increase in stocks, which I realise are not the right hon. Gentleman's responsibility as the good winter has been a major contributory factor, has resulted in the need for a reduction in coal output. He said that he cannot guarantee supplementary sales. Does he accept that the Minister for Energy, sitting next to him, has already indicated that there will be a 2 per cent. drop in coal output this year as a consequence of the imposition of VAT?
In all these matters, the statement today is a testament of failure. The right hon. Gentleman said that the coal industry, and anyone else who can do so, will have the opportunity to find new markets. No Opposition Member is impressed by the failure, after five and a half months of hand-wringing, to provide any new or substantial markets for coal.
Will the right hon. Gentleman tell us how many people will be made redundant as a consequence of the announcement? We know that six collieries will be placed on care and maintenance and that Maltby will go into development. Development work is not carried out by British Coal employees but by contractors. Will he say what will be the net effect on jobs at those seven collieries of the development work which is to be carried out?
A number of people are not prepared to be impressed by the failure that the right hon. Gentleman has announced or by his soft-soaping and avoidance of giving us the serious figures of the unemployment which will follow as a consequence of today's statement.

Mr. Heseltine: There has been an immensely depressing response from the Opposition. If the House were considering today a review by the Government, it would at least be understandable if it were criticised by Her Majesty's Opposition, but when an all-party Select Committe has crawled over every conceivable opportunity—and I have accepted the bulk of its recommendations—it is lamentable that the Opposition are now trying to wriggle away from what was an agreed all-party report. It undermines the credibility of the Select Committee procedures of the House.
I hope that the Opposition will not mislead their constituents into thinking that there is nothing in the opportunities of the sort that I have provided.

Business of the House

The Lord President of the Council and Leader of the House of Commons (Mr. Tony Newton): With permission, Madam Speaker, I should like to make a statement about the business for next week.
MONDAY 29 MARcH—Proceedings on the Consolidated Fund (No. 3) Bill.
Motion to approve the White Paper entitled "Prospects for Coal: Conclusions of the Government's Coal Review".
TUESDAY 30 MARcx—European Communities (Amendment) Bill: Progress in Committee—19th day.
WEDNESDAY 31 MARCH—Until seven o'clock, motions on the Legal Aid Regulations. Details will be given in the Official Report.
Motion to take note of EC document No. 4608/93 relating to the common agricultural policy.
THURSDAY 1 APRIL—Motion for the Easter Adjournment, followed by debates on the Adjournment.
FRIDAY 2 APRIL—Debates on the Adjournment.
The House will also wish to know that European Standing Committees will meet on Wednesday 31 March at 10.30 am to consider European Community documents as follows:
Committee 'A'
Documant No. 4439/93 relating to guaranteed prices for cane sugar.
Committee 'B'
Document No. 9910/92 on co-operation with developing countries over demography and family planning. [Wednesday 31 March:
Legal Aid Regulations

1. Civil Legal Aid (Financial Conditions and Contributions) (Scotland) Regulations 1993.
2. Advice and Assistance (Financial Conditions) (Scotland) Regulations 1993.
3. Advice and Assistance (Scotland) (Prospective Cost) Amendment Regulations 1993.
4. Advice and Assistance (Assistance by Way of Representation) (Scotland) Amendment Regulations 1993.
5. Legal Aid (Scotland) Act 1986 Amendment Regulations 1993.
6. The Civil Legal Aid (General) (Amendment) Regulations 1993 (S.I. 565)
7. Civil Legal Aid (Assessment of Resources) (Amendment) Regulations 1993. (S.I. 788)
8. Legal Aid in Criminal and Care Proceedings (General) (Amendment) Regulations 1993. (S.I. 789)
9. Legal Advice and Assistance (Amendment) Regulations 1993. (S.I. 790).]

Mrs. Margaret Beckett: Does the Leader of the House recall that the Opposition have repeatedly asked for a statement on the coal industry, which the House has been promised from the early part of this year? We consider that it is an outrage that the statement should be left so late that the House has only between now and Monday to consider the White Paper and the options that the Government have put before the House. Will the right hon. Gentleman confirm that amendments to the Government's motion must be tabled tomorrow to be in order? When do the Government expect to have the motion ready so that we can scrutinise and amend it?
As it is inevitable that there will be less than 24 hours for hon. Members to consider what amendments they may wish to table, may I suggest to the right hon. Gentleman, with all the force at my command, that it is the duty of the Leader of the House and his colleagues to table a business motion—which it is only within their power to table—to allow Madam Speaker to consider selecting more than one amendment for debate and Division? That is the only way that we can be certain that hon. Members will have the chance, in the brief period open to them, to draft their amendments and to acquaint themselves with the range of options that might be considered by the House. As the President of the Board of Trade made such a feature of his approval of the Select Committee's report, I am sure that the Lord President will find it easy to accept such a request as, in effect, this is the only way in which we can be sure of a Division on that report.
Secondly, in view of what has been said in the House about stock-taking on the developments in Scotland—the way in which Scottish business will in future be handled—I ask the right hon. Gentleman to find Government time for a debate in which we can follow up the statement and consider its implications.
Will the Leader of the House give serious consideration to early-day motion 1596?
[That this House notes that the Standing Committee on Regional Affairs has not met since 26th July 1978; finds it inconsistent that there is a forum for English regions within the European Community but not one within Parliament; and calls upon the Lord President of the Council to refer appropriate matters to the Standing Committee on Regional Affairs, as provided by S.O. No. 100.]
It draws attention to the potential existence of a Committee of the English regions. There is considerable support from the Opposition side—and I suspect from the Government side—for the reinstatement of the Standing Committee on Regional Affairs, which has not sat since 1978. I ask the right hon. Gentleman to consider that.
Will the Leader of the House tell us when it is likely that we will have another Opposition day, and when he will be in a position to tell us the business of the House for the week after the Easter recess?

Mr. Newton: Taking first the right hon. Lady's remarks about the coal statement and intended debate, I hope that she will acknowledge that the statement on which my right hon. Friend the President of the Board of Trade has just completed answering questions reflected a huge amount of work in a very complex area, and it understandably took more time than I suspect even he would have wished. The work needed to be done thoroughly, and it was right that he should make a statement in the House before the Easter recess. If that has meant a little less time than the right hon. Lady would have liked between the White Paper and the debate—I am sure that the House would have wished to have had that debate before the recess—I think that that is preferable to not being able to proceed before the Easter recess. We are now proposing, in the light of today's statement, to have the debate on Monday.
I hope that the motion will be tabled tonight in order to ease the problem to which the right hon. Lady referred. I will undertake to reflect on the other points she made, but that is very much without commitment and there will be discussions through the usual channels.
As to the Select Committee report, it is clear that the interrelationship between my right hon. Friend the


President of the Board of Trade's statement, the White Paper and the Select Committee report, and what my right hon. Friend said about it—subject to your judgment, Madam Speaker, at the time—means that reference to the content of the Select Committee's report would be bound to be in order in the course of the debate.
As to the right hon. Lady's request about Supply days and Scottish stock-taking, it is manifest that I cannot undertake to find time for either before Easter, but I will consider what possibilities there may be afterwards, particularly in respect of her understandable request for some Supply day time.

Mr. Harry Greenway: I ask my right hon. Friend, for the second time, to find time next week to debate early-day motion 1222, which has been signed by hon. Members on both sides of the House.
[That this House deplores the growing number of vicious and mutilating attacks upon horses; notes the appalling suffering this causes to the dumb animals in question; and calls upon all who have a responsibility for or care about the welfare of horses and other animals to spare no effort to stamp out this sick and evil practice forthwith.]
Attacks on horses are increasing and are now happening from Yorkshire to Land's End. Horses are being killed, maimed, and brutally assaulted, including an attack yesterday on a racehorse that had its tongue cut out. These attacks are causing much concern all over the country and great distress to animal lovers and others.

Mr. Newton: Again, I am conscious of the persistent and proper interest that my hon. Friend has taken in the matter. I noticed another report of an horrific incident in the newspaper either this morning or yesterday—after last night, I am having a little difficulty in distinguishing between the two. I note my hon. Friend's request, but I cannot add to what I said in response to him last week.

Ms Liz Lynne: When can we expect an announcement about assisted area status? It is particularly important for the people of Rochdale who already have assisted area status, the loss of which would make it difficult to attract new businesses. Will the Leader of the House make time for a debate on that subject next week as a matter of urgency?

Mr. Newton: Again, that is a subject about which I have been asked several times in recent weeks when I have referred to the review to which the hon. Lady herself referred. Clearly, the Government are in no way anxious to delay the outcome on those important matters, but they, too, demand careful consideration. I regret that at present I cannot give the hon. Lady a clear indication about timing, let alone about the timing of a debate.

Sir Roger Moate: Will my right hon. Friend find some way whereby the House can consider early-day motion 1489, on worldwide unitary taxation?
[That this House deeply regrets the continuing delay in resolving the use, by the State of California, of worldwide unitary tax; and calls upon Her Majesty's Government to implement the retaliatory provisions in section 812 of the Income and Corporation Taxes Act 1988, if the issue has not been satisfactorily resolved by 31st December 1993.]
The matter is of such importance that it was initialed by leading Members of most parties in the House and has been signed by no fewer than 210 Members from all parts of the House. There is a general understanding that, if

anything goes wrong, there could be grave consequences for British companies in the United States, for American corporations trading in the United Kingdom and for international tax treaties. Can we get the message through to the United States Administration that we must have President Clinton's support if things go seriously wrong in this important respect?

Mr. Newton: I am aware of the importance of the matter and my hon. Friend is right to say that the continued imposition of worldwide unitary taxation on United Kingdom-owned companies in California has been of great concern to hon. Members on both sides of the House for many years. My hon. Friend will well know that my right hon. Friends the Prime Minister, the Chancellor of the Exchequer and the Foreign Secretary have all, within the recent past, impressed on their opposite numbers and others in the United States Administration the importance of an early solution to the problem.
I cannot at this moment promise a specific debate, but it occurs to me that the House is likely to spend some time in the not too distant future discussing the Finance Bill, and my hon. Friend's ingenuity will probably permit him to work out a way of raising the matter in the course of those proceedings.

Mr. Peter Kilfoyle: Will the Leader of the House answer the question put by my right hon. Friend the Member for Derby, South (Mrs. Beckett) about early-day motion 1596 on the Standing Committee for the Regions?

Mr. Newton: I was conscious, even as I sat down, that there was something that the right hon. Member for Derby, South (Mrs. Beckett) had said of which I had failed to make a note and had therefore missed in responding to her. I promise the hon. Gentleman and the right hon. Lady that that was not a deliberate attempt at evasion. However, I am afraid that they may find rather less than satisfactory my reply, which is that I am not persuaded at the moment that there is a sufficiently strong case for bringing back into use this procedure which, as the right hon. Lady said, it has not been found necessary to use since 1978. I do not rule it out, but at the moment I am not persuaded.

Mr. Patrick Thompson: Bearing in mind that it is just over a year since the report of the Select Committee on Sittings of the House was ordered to be printed, and that that Committee, under the chairmanship of my right hon. Friend the Member for Westmorland and Lonsdale (Mr. Jopling), made excellent suggestions on the timetabling of Government legislation and other matters, some of us are disappointed that we cannot make progress or have a debate on the matter. Can my right hon. Friend assure me that we will be able to make some progress at the earliest possible time?

Mr. Newton: I can certainly assure my hon. Friend that I have in no way forgotten or ceased to be concerned to make progress in the direction suggested by the report. He will know also that there is, as I have said several times in recent weeks, continuing interchange in the usual channels on the matter, but it has not yet been possible to make as much progress as I would like. In case it is the most recent events of parliamentary proceedings that are in my hon.


Friend's mind, I remind him that the proposals in the report did not relate to proceedings on Bills that are taken in Committee of the whole House.

Dr. Norman A. Godman: The Leader of the House and your good self, Madam Speaker, know that early this morning five of my constituents perished in a house fire in Auchendarroch street in Greenock. Four of those who died were brothers aged four, three and one, and their infant sister aged four months. I am sure that the House will extend its deep sympathy to the family, my constituents. The Strathclyde firemaster, Mr. John Jamieson, said that it was a tragedy and that they had all died for the sake of £5—the cost of a smoke detector.
The Secretary of State for Scotland has plans to lay regulations before the House concerning the installation of mains-operated smoke detectors in new houses. In the immediate aftermath of that terrible tragedy, may I ask the Leader of the House to impress upon his right hon. Friend the need to lay those regulations next week and to extend them, if he can, to existing houses in the public sector where most of these terrible tragedies take place?

Mr. Newton: I am grateful to the hon. Gentleman for courteously giving me notice that he wished to raise that matter if he had an opportunity to do so. I share entirely his sadness at this morning's tragic incident in Greenock when four young children and one adult died in a house fire, particularly as it comes so soon after a number of other fire fatalities in Fife in recent weeks. The Strathclyde fire brigade is investigating the full circumstances of the incident. In the meantime, I, on behalf of the Government, and I am sure on behalf of everyone in the House, endorse the expression of sympathy that the hon. Gentleman included in his remarks.
My right hon. Friend the Secretary of State for Scotland has the issue under consideration and will bring forward regulations as soon as possible to make the fitting of wired-in smoke detectors compulsory in all new dwellings, but I am afraid that I cannot give the hon. Gentleman an immediate promise that that will happen next week.

Mr. Peter Luff: Will my right hon. Friend join me in welcoming the excellent progress that we are now making on the European Communities (Amendment) Bill? What comfort can he give me about the prospect of time for debates on a wide range of other equally important issues which have been squeezed out by the disturbing delaying tactics used, I regret to say, by hon. Members on both sides of the House. I am thinking in particular of an early debate on law and order and a review of the Criminal Justice Act 1991, the shortcomings of which are becoming daily more apparent.

Mr. Newton: I share my hon. Friend's satisfaction at the further progress that we have been able to make in recent hours, or recent days, however one wishes to describe it, on the European Communities (Amendment) Bill. I would wish to have a little more evidence of continued progress before responding as openly as my hon. Friend would like, but I shall bear his request in mind. However, despite the pressures to which he has

referred, I have found time—I accept that it was on a Friday—within the recent past for a full day's debate, effectively, on law and order matters.

Mr. David Trimble: I remind the Leader of the House of a request for an early debate by my hon. Friend the Member for Belfast, South (Rev. Martin Smyth) and myself on the recent television revelations about the origins of the Provisional IRA, which confirm the widespread belief that successive Irish Governments assisted in the creation and support of that organisation and that successive British Governments knew about that and did not make an adequate response. Does the Leader of the House realise that his actions in building a wall of silence round this by refusing a debate and by blocking questions, confirmed by a letter that I received today, will only lead to the conclusion that the Government still have something to hide?

Mr. Newton: I am sure that the hon. Gentleman will understand that I do not for a moment accept the implications that he chooses to read into what I have said on one or two occasions in recent weeks, what I think some of my right hon. Friends have said and what I have just written to him. I certainly shall not seek to add to that this afternoon.

Mr. Jacques Arnold: May we have a debate next week, before the Easter recess, on the rates of council tax set by individual local authorities for next year? During that debate we could highlight the fact that the average council tax set by Labour-controlled authorities is £100 higher than the rate set by Conservative-controlled authorities.

Mr. Newton: I need hardly say that nothing would please me more than to be able to respond to my hon. Friend's request, but I am afraid that I literally cannot find time for that specific debate. However, he is not doing badly himself in drawing attention to that important fact.

Mr. Roland Boyes: Is the Leader of the House aware that there are groups of dreadful people who spend much of their time looking at and exchanging photographs of naked children in obscene poses? To get even more compromising poses, some sick people, who should be banned and locked up for ever, are using digital imaging techniques to create ever more terrible, obscene pictures. Will the Leader of the House co-operate with the Metropolitan police and with other police forces to get this practice stamped out and, more importantly, to get the perpetrators caught so that they can be locked up for life?

Madam Speaker: Order. That is barely a business question. The hon. Gentleman should be asking the Lord President whether there will be a debate on the matter.

Mr. Boyes: The Lord President has known me long enough by now.

Mr. Newton: The hon. Gentleman is right to say that I have known him a long time. I not only bear him no ill will, but understand the spirit in which he has asked his question. He will understand that the proper response is for me to undertake to draw his remarks to the attention of my right hon. and learned Friend the Home Secretary, which I shall do.

Mr. John Garrett: The duty of the Leader of the House is to uphold the rights and privileges of the House. Does he think that he has carried out that duty with regard to the White Paper, "The Prospects for Coal: Conclusions of the Government's Coal Review"? Does he have any plan to improve the House's powers of scrutiny? If he has, will he make a statement?

Mr. Newton: The hon. Gentleman makes his own point in his own way. I think that I have demonstrated in recent weeks a number of ways, some of which are better known in the usual channels than more openly, in which I have considered the interests of the House as a whole and of the Opposition parties in particular. I do not apologise for having contributed to the statement having been made before Easter and for having provided an early opportunity, on Monday next week, to debate it. I do not regard that as a failure of my responsibilities to the House; I regard it as the fulfilment of those reponsibilities.

Mr. George Howarth: Will the Leader of the House consider providing an opportunity as early as possible, preferably next week, for the House to discuss the role of receivers and liquidators in cases in which factories have closed and an alternative bid has been made? That would give me an opportunity to discuss the case of Pendleton's Ice Cream in my constituency. Following the closure of Clarke Foods, a viable business plan was put together by myself and others. The plan has been financed, and it has been supported by the Department of Trade and Industry and by the local authority, yet the receiver Robson Rhodes, headed by Mr. Ipe Jacob, has refused to reach a deal over a licence on the lease for the site. At this very moment, Nestlé is ripping out the machinery, plant and equipment, although there could have been a viable business on the site.

Mr. Newton: I cannot promise a debate on that matter next week. There are substantial opportunities for a wide range of matters to be raised within the business announced because we are due to have a number of Adjournment debates towards the end of the week. The hon. Gentleman may prefer not to or may be unable to raise the matter in that way. As he acknowledged by the direction of his gaze at one stage, my hon. Friend the Under-Secretary of State for Corporate Affairs has heard his remarks and will no doubt reflect on them.

Mr. Brian Donohue: Will the Leader of the House make time next week for a debate on early-day motion 1669?
[That this House condemns the decision of the Chancellor of the Exchequer and the Home Secretary in intervening in the long standing successful pay formula adopted by the Fire Fighters National Organisation which has meant many years of trouble free operation; and calls on the Government to support its continuation as failure to follow this advice may lead to a damaging unnecessary dispute.]
The motion has been signed by more than 170 Opposition Members. Given the long-term industrial peace among the fire brigades, does the Leader of the House agree that it is important that, at the very least, a statement on that important subject should be made by the Home Secretary?

Mr. Newton: My right hon. and learned Friend the Home Secretary, as I recall because the subject was raised

at business questions last week, made a number of points in the wake of his meeting with a number of members of the firemen's union in the middle of last week. He made it clear then, and I make it clear now, that my right hon. Friends have made no decision to do away with the fire service pay formula, to which the Government are not a party. As the hon. Gentleman well knows, the Government's policy is that, in the current pay round, the pay rises of all public sector workers should not exceed 1·5 per cent. The Government do not consider that fire fighters should be an exception to that policy.

Mr. Andrew Mackinlay: In contemplating future business of the House, will the Leader of the House have regard to the fact that this week alone the Government have made two major announcements which affect millions of people in south-east England—the statement in the House on the channel tunnel rail route, and yesterday, without coming to the House, the announcement of the east Thames corridor proposal? Does he agree that both those announcements justify a separate debate in Government time? If he feels unable to agree to that, will he contemplate a debate in Government time on south-east England, which was the battleground at the 1992 general election and will be at the next? A debate would give hon. Members on both sides of the House an opportunity to refer to the high levels of unemployment and of business failure in south-east England, and to discuss the proposals, parts of which are quite absurd and not in the best interests of the 10·5 million people living in south-east England outside Greater London.

Mr. Newton: I do not accept, despite the county we have in common, the thrust of the last part of the hon. Gentleman's remarks. The major infrastructure improvements about which we are talking are an advantage to many parts of south-east England and not simply to Essex and to Kent, although they happen to pass through those two counties and through parts of London. Leaving aside whether or not I agree with the hon. Gentleman, I cannot undertake to find time as he requested, but I shall bear his request in mind. I suspect that his request may interrelate with some of the suggestions made earlier about the Standing Order concerning a regional committee, or whatever one wants to call it.

Mr. George Foulkes: When will the Leader of the House be able to implement the recommendation of the Procedure Committee that we should have two weeks' business in one announcement? That would bring a little less chaos into our lives. Next Tuesday we are to have what is described as progress on the European Communities (Amendment) Bill—the 19th day. Last night, I saw Ministers with folding beds in their rooms in the House. Who pays for those beds? Are they available to Opposition Members? We may need them in future.

Mr. Newton: I regard it as progress, whether the hon. Gentleman does or not. I managed to snatch an hour or two's sleep in a chair and not on a bed, folding or otherwise. I slightly envy those to whom he refers.

Mr. Foulkes: Two weeks' business?

Mr. Newton: It is probably the relatively modest amount of sleep I had in a chair that is leading me to miss some of the questions. I do not seek to evade the hon.


Gentleman. I made some comment on that matter when we debated the Jopling report last July. It was not a report by the Procedure Committee in the technical sense. There are real difficulties about going as far as the Committee suggested in terms of the way in which we deal with Government business and the planning of the House's programme. I hope that it has been clear in the period since July, although I accept that this may be masked a bit at the moment by the European Communities (Amendment) Bill, that I have been making every endeavour to move in the direction that the Jopling report recommended in a number of matters, including having announced the Easter recess so far in advance that some people did not realise that I had announced it.

Easter Adjournment

Madam Speaker: I have a short statement to make about arrangements for the debate on the motion for the Adjournment, which will take place on Thursday 1 April rather than immediately following the passing of the Consolidated Fund (No. 3) Bill. Hon. Members should submit their subjects to my Office not later than 10 pm on Tuesday 30 March. A list showing the subjects and times will be published the following day.
Normally the time allotted would not exceed one and a half hours, but I propose to exercise a discretion to allow one or two debates to continue for rather longer, up to a maximum of three hours. Where identical or similar subjects have been entered by different hon. Members whose names are drawn in the ballot, only the first name will be shown on the list. As some debates may not last the full time allotted to them, it is the responsibility of hon. Members to keep in touch with developments if they are not to miss their turn.
May I take the opportunity to remind hon. Members that on the motion for the Adjournment of the House on Friday 2 April up to eight hon. Members may raise with Ministers subjects of their own choice. Applications should reach my Office by 10 pm on Monday next. A ballot will be held on Tuesday morning and the result made known as soon as possible thereafter.

Orders of the Day — European Communities (Amendment) Bill

Considered in Committee [Progress, 24 March]

[MR. MICHAEL MORRIS in the Chair]

Clause 1

TREATY ON EUROPEAN UNION

Amendment proposed [24 March]: No. 81, in page 1, line 9, after 'II', insert
'(with the exception of those Articles and Protocols set out in Schedule [Second stage for achieving economic and monetary union.])'.—[Mr. Denzil Davies.]

Question again proposed, That the amendment be made.

The Chairman of Ways and Means (Mr. Michael Morris): I remind the Committee that we are also considering the following: Amendment No. 83, in page 1, line 9, after 'II', insert '(other than Article 109h)'.
Amendment No. 170, in page 1, line 9, after 'II', insert
 '(except Article 73e on page 14 of Cm 1934)'
Amendment No. 171, in page 1, line 9, after 'II', insert
'(except Article 73f on page 14 of Cm 1934)'.
Amendment No. 172, in page 1, line 9, after 'II', insert
'(except Article 73g on page 14 of Cm 1934)'.
Amendment No. 196, in page 1, line 9, after 'II', insert
'except Article 3a(2) on page 10 of Cm 1934'.
Amendment No. 200, in page 1, line 9, after 'II', insert
'except Article 73g(2) on page 14 of Cm 1934'.
Amendment No. 204, in page 1, line 9, after 'II' insert
'except Article 109e(2(a)) on page 25 of Cm 1934'.
Amendment No. 206, in page 1, line 9, after 'II', insert
'except Article 109e(5) on page 25 of Cm 1934'.
Amendment No. 207, in page 1, line 9, after 'II', insert
except Article 109(f)'.
Amendment No. 210, in page 1, line 9, after 'II', insert
'except Article 109m(1)'.
Amendment No. 211, in page 1, line 9, after 'II', insert
'except Article 109m(2)'.
Amendment No. 319, in page 1, line 9, after 'II', insert
'(except Article 3a(3) on page 10 of Cm 1934).'.
Amendment No. 333, in page 1, line 9, after 'II', insert
'(except paragraph 5 of Article 109e on page 25 of Cm 1934)'.
Amendment No. 363, in page 1, line 9, after 'II', insert
'except Article 3(a) Paragraph 3 as referred to in Article G on in page 10 of Command Paper number 1934'.
Amendment No. 366, in page 1, line 9, after 'II', insert
'except Article 73b as referred to in Article G on page 13 of Command Paper number 1934'.
Amendment No. 367, in page 1, line 9, after 'II', insert
'except Article 73b as referred to in Article G on page 13 of Command Paper number 1934'.
Amendment No. 368, in page 1, line 9, after 'II', insert
'except Article 73c as referred to in Article G on page 13 of Command Paper number 1934'.
Amendment No. 369, in page 1, line 9, after 'II', insert
'except Article 73D as referred to in Article G on page 14 of Command Paper number 1934'.
Amendment No. 370, in page 1, line 9, after 'II', Insert
'except Article 73H as referred to in Article G on page 15 of Command Paper number 1934'.
Amendment No. 380, in page 1, line 9, after 'II', insert
'except Article 109g as referred to in Article G on page 27 of Command Paper number 1934'.
Amendment No. 381, in page 1, line 9, after 'II', insert
'except Article 109i as referred to in Article G on pages 27 and 28 of Command Paper number 1934'.
Amendment No. 382, in page 1, line 9, after 'II', insert

'except Article 1091 as referred to in Article G on pages 29 and 30 of Command Paper number 1934'.
Amendment No. 409, in page 1, line 9, after 'II', insert
'(except the Protocol on the Convergence Criteria referred to in Article 109j of the Treaty establishing the European Community on page 112 of Cm 1934).'.
Amendment No. 440, in page 1, line 9, after 'II', insert
'(except from "(79)" to "force" on page 58 of Cm. 1934)'.
Amendment No. 51, in page 1, line 10, after '1992', insert
'but not Article 109c in Title II thereof'.
Amendment No. 60, in page I, line 10, after '1992', insert
'but not the Protocol on the statute of the European Monetary Institute.'.
Amendment No. 205, in page 1, line 10, after '1992', insert
'except Article 109e of Title VI of Title II thereof'.
Amendment No. 208, in page 1, line 10, after '1992', insert
'but not Article 109j of Title VI of Title II thereof'.
Amendment No. 209, in page I, line 10, after '1992', insert
'but not Article 109k(1) of Title VI of Title II thereof'.
Amendment No. 225, in page 1, line 10, after '1992', insert
'but not the Protocol on the Transition to the Third Stage of Economic and Monetary Union'.
Amendment No. 400, in page I, line 13, after 'Community', insert
'with the exception of the Protocol on certain provisions relating to the United Kingdom of Great Britain and Northern Ireland on pages 114 to 116 of Cm 1934.'.
Amendment No. 444, in clause 2, page 1, line 19, after 'intends', insert 'not'.
Amendment No. 35, in clause 2, page 1, line 23, at end add
'; but in circumstances where convergence in economic performance as established in Article 109 has been achieved and where other major member states have decided to move to the third stage, the proposal for the United Kingdom to do so shall be placed before Parliament for affirmation.'.
Amendment No. 42, in clause 2, page 1, line 23 at end add
'and the decision in principle so to move has first been approved by a separate Act of Parliament'.
Amendment No. 420, in clause 2, page 1, line 23, at end add
'and unless Her Majesty's Government has reported to Parliament on its proposals for the co-ordination of economic policies, its role in the European Council of Finance Ministers (ECOFIN) in pursuit of the objectives of Article 2 as provided for in Articles 103 and 102a, and the work of the European Monetary Institute in preparation for Economic and Monetary Union.'.
Amendment No. 39, in clause 2, page 1, line 23, at end add—
'(2) As from the beginning of the year 1993 the Secretary of State shall—

(a) not less often than once in every six months, lay before Parliament a report stating what, if any, steps are being taken by the United Kingdom with a view to moving to the third stage, and
(b) seek Parliamentary approval for any such steps as are being, or are proposed to be, taken with that objective in view.'.


New clause 56—Convergence for economic and monetary union: reporting fulfilment—
'In complying with the requirement to submit information under Article 103(3), Her Majesty's Government shall report annually to Parliament on the extent of its fulfilment of the criteria set out in Article 109j, and shall include within its reports a statement on the implementation of a programme to


improve economic performance, including measures for investment and employment measures to realise the objectives of Article 2.'.
Amendment No. 82, new schedule:—
'SECOND STAGE FOR ACHIEVING ECONOMIC AND MONETARY UNION

(1) Article 109e.
(2) Article 109f.
(3) Protocol on the Statute of the European Monetary Institute.'.

6 pm

Mr. Stephen Byers: On a point of order, Mr. Morris. You will remember that, when the Committee met on 4 March, in response to a point of order by my hon. Friend the Member for Hamilton (Mr. Hamilton) about whether you would be in a position to permit a further debate on the protocol on social policy, you said that the nearer we get to a Division the better your position would be to judge whether to accede to requests for a further debate. As we have had the opportunity of spending 20 of the past 26 hours in Committee on the Bill, I assume that we are now substantially nearer to a Division. Do you intend to allow a further debate on social policy and, in that context, are you minded to rule new clause 74 in order?

The Chairman of Ways and Means (Mr. Michael Morris): I shall comment only on the substantive point that the hon. Gentleman raised. I am well aware of the Committee's concern about this matter, but I stand by my undertaking to make an announcement in good time.

The Financial Secretary to the Treasury (Mr. Stephen Dorrell): At our last sitting, we made good progress on the treaty's implications for Britain of economic and monetary union. Under the first group of amendments, we considered the implications for monetary policy of stage 3, if we choose to go that far.
Under the second group, we considered the implications for fiscal policy at stage 3. This group concentrated on the obligations and implications for our national law of the interim stage—stage 2 of the process of economic and monetary union. For Britain, stage 2 is different from stage 3 because, as the right hon. Member for Llanelli (Mr. Davies) rightly said at the beginning of the debate, we have a treaty obligation to move to stage 2 at the beginning of stage 2, which is envisaged in the treaty to be 1 January 1994. In addressing the question of obligations in stage 2, therefore, we are indeed addressing the obligations that will rest on Britain from the beginning of stage 2.
The right hon. Member for Llanelli said, I think, that he saw no clear divide between stage 2 and stage 3 within the treaty. I do not think that he meant to suggest that there was not a clear divide between the legal obligations that arise under stages 2 and 3, because it is clear from any reading of the treaty that there are fundamental and radical differences in the legal obligations. In stage 2, in so far as there is a Community monetary institution, it is the European Monetary Institute, not the European system of central banks. It is clear from the treaty that stage 2 envisages that monetary policy will remain a national Government responsibility.
In stage 2, as we discussed in an earlier group of amendments, the treaty's provisions on deficits do not have the teeth that are envisaged in stage 3. If one looks at

the treaty's text on stage 3, one finds that, by that time, the EMI will have dissolved itself and become the European system of central banks. It is clear that, for at least 10 of the 12 member states, stage 3 involves a single currency and does not therefore involve national responsibility for monetary policy. It also involves clear enforceable powers in the deficit provisions that we discussed earlier.
It does not seem to be a sustainable argument that there is not a clear divide in terms of legal obligation between stage 2 and stage 3. I think that the right hon. Member for Llanelli was seeking to develop the argument that the web of obligations that is envisaged under the treaty is "seamless", and that the obligations that arise in stage 2, which are identifiably different from the obligations under stage 3, elide into each other in a way that does not allow for an effective break-point. He sought to argue, therefore, that it would be impossible for us to opt out of stage 3 because of the indivisibility of the obligations that arise between stages 2 and 3.
It must be accepted in all parts of the House that there is a clear and fundamental difference between the obligations as defined in stage 2 and those as defined in stage 3. The question is whether the United Kingdom protocol effectively allows us a break-point so that we can choose whether we move from the stage 2 obligations, which we have accepted, to the stage 3 obligations, which in the Government's contention we have not yet accepted.

Mr. Ted Rowlands: The hon. Gentleman has a fair case: the protocol makes it clear at what stage the break-point is reached. I am puzzled by the first paragraph of article 109j, which proposes that the Commission and the EMI will report on the progress of all member countries in moving towards EMU. That is not excluded from the process under the protocol, but it is under paragraph 2, because the United Kingdom will have to notify the Council before the Council makes an assessment under article 109j. Paragraph 1 of article 109j, which proposes a pretty formidable process, is not broken by the protocol.

Mr. Dorrell: I understand that the provisions of paragraph 1 of article 109j apply to all 12 member states, but the obligation under that paragraph is for the Commission and the EMI to report to the Council. I shall deal later with the nature of the convergence obligations that rest on individual member states. That is indeed a substantial issue, and I should like to go through that for the Committee so that it can be fully understood.

Sir Trevor Skeet: My hon. Friend has been dealing with the obligations that arise under stage 2, but there are a few others, such as responsibility for maintaining some connection with the EMS—he has already said that he proposes to rejoin at the first opportunity—and his obligation to exchange rates.

Mr. Dorrell: My hon. Friend is right that I have not sought to give an exhaustive list of the obligations that arise in stage 2. I sought to draw out three of the obligations that are clearly different between stages 2 and 3 to substantiate my proposition that are that there are clear and identifiable differences of obligation between the two stages. The question is whether we can make an effective choice not to move, if we choose not to do so,


from stage 2, for which we have a treaty obligation, to stage 3, for which, the Government contend, we have no obligation.

Mr. Christopher Gill: Will my hon. Friend give the Committee a categorical assurance that the British opt-in will not be overturned by the European Court?

Mr. Dorrell: My hon. Friend can be assured that the protocol, which has been accepted by all 12 member states, would not be overturned by the European Court—for two reasons. First, no party would wish to take us to the European Court over that issue; secondly, the protocol is robust in law and makes clear the implications that are supposed to flow from it.

Mr. Tim Renton: Will my hon. Friend give way?

Mr. Dorrell: Let me just finish dealing with the last intervention.
The terms of the protocol are clear. The first sentence reads:
The United Kingdom shall notify the Council whether it intends to move to the third stage

Mr. Renton: I am following with interest what my hon. Friend is saying, and I listened to much of the speech made by the right hon. Member for Llanelli (Mr. Davies) in the early hours of the morning. While there was much that he said with which I did not agree, at one point I thought that he was on, at least, interesting ground—the starting of the process leading towards the independence of the central bank.
I understood my hon. Friend to say clearly this morning that there was no intention of starting towards that process. I agree with moving towards an independent central hank, because I think that it would be better if monetary policy were run by a central bank that was more or less independent of us politicians. That is by the way. In this, at least, there is an elision between stages 2 and 3, to use the elegant word that my hon. Friend has just used. It is hard to envisage a process whereby we do nothing in this respect while we are holding our horses and deciding whether to move on to stage 3.

Mr. Dorrell: I hope that my right hon. Friend will forgive me if I do not answer that question now. I intend to address it later, as I agree that it was one of the substantial points that came up in the debate.

Mr. Nicholas Budgen: Will my hon. Friend comment on the information that the Treasury Select Committee received in Spain, France and Germany, where we visited the Finance Ministers and central bankers? They were all of the view that, if the pound continued to float and, as they put it, obtain an unfair competitive advantage, that would be contrary to their idea of the single market, and that they would use all political and legal pressures available to them to get us back into the ERM as quickly as possible. It is possible that, if we do not go back into the ERM after 1 January of next year, we shall come under severe pressure from our European allies.

Mr. Dorrell: I propose to make a little further progress in my speech before replying to my hon. Friend's point, so I shall have to give him the answer that I gave my right hon. Friend the Member for Mid-Sussex (Mr. Renton). That is, that I intend to cover precisely that ground

because I know that it is of concern to hon. Members. However, I shall do so at the point in my speech when I intended to deal with it because that is the best way to develop the argument.
The question is whether there is a break-point that allows use effectively to exercise the choice contained in our protocol. For 10 of the 12 member states, it is clear that there is no break-point. Stage 2 is envisaged, as I think it was put by the hon. Member for Great Grimsby (Mr. Mitchell) in a letter to me, as a bridge to stage 3. Ten of the 12 member states of the Community are under an obligation to cross that bridge, because they have a treaty obligation to join stage 3.
That is not the same as saying that there is no clear divide between the two stages. As I have said, radically different legal consequences flow from whether one is in stage 2 or stage 3. However, they are clearly obliged to move from stage 2 to stage 3, according to the terms of the treaty. For the United Kingdom and Denmark, however, the position is different. I hope that the Committee will forgive me if I do not enlarge at great length on the position of Denmark. I imagine that we are more interested in the position of the United Kingdom.
Not only are there radically different legal consequences for the United Kingdom, as for all other member states, between stage 2 and stage 3, but we have, as a result of the protocol and the provisions of our domestic law, a clear right to choose—subject to the provisions of the Bill, which require that the House of Commons passes an Act of Parliament before the Government can communicate the decision to join—whether we move from stage 2 to stage 3. That is the difference between us and the other 10 member states.
I shall deal now with the legal obligations that arise during stage 2. The key question during stage 2 is monetary policy. Some, like the right hon. Member for Llanelli, have argued that the effect of the terms of the treaty is to pass significant, if not all, amounts of monetary authority, even at stage 2, to the European Monetary Institute. I shall go through the treaty next so as to show that I do not believe that that is true.

Mr. Denzil Davies: rose—

Mr. Dorrell: If I have misrepresented the right hon. Gentleman, I shall be happy to give way.

Mr. Davies: I did not say that. I said that the monetary institute was obviously going to prepare the way for monetary union, and had a considerable part to play. I accept that, until one gets to stage 3, the member states have the main jurisdiction.

Mr. Dorrell: In that case, I shall not dwell on the point at any length. I thought that the right hon. Gentleman was arguing that, at stage 2, there was a significant qualification of the monetary responsibility of major states. If the Committee accepts that, until we get to stage 3, the monetary authority in each member state is that member state's national monetary authority, I need not develop that argument at length.
I simply refer any hon. Member who is interested in that subject to article 3 of the EMI statute, the general principles article, which clearly states that anything in it is without prejudice. On page 104, article 3 states:


The EMI shall carry out the tasks and functions conferred upon it by this Treaty and this Statute without prejudice to the responsibility of the competent authorities for the conduct of the monetary policy within the respective Member States.
Earlier, we debated the effect of article 8, page 107, of the EMI statute, headed "Independence", which covers the independence of the members of the council of the EMI. I conceded in interventions in the speech of the right hon. Member for Llanelli that that article was not a model of clear drafting. However, its effect is to safeguard the existing responsibility, within national law, of the members of the council of the EMI, in exactly the same way as is currently provided for in the Committee of Central Bank Governors. It is only the council as an institution that undertakes not to take instructions from community institutions or governments of member states.

Dr. Norman A. Godman: Will the Minister clear up a concern that I have about the review of monetary and financial situations of the member states? Am I right in thinking that, during stage 2, the monetary committee, as set out in article 109(2) on page 24, will have the right and the power to review the monetary and financial situations of all 12 states, whereas, when we reach stage 3, the monetary committee is to be dissolved and, in its place, we have an economic and financial committee? Is that committee responsible only for the reviewing of the monetary and financial situation of the 10 countries that have signed up to stage 3? Will it have the right to examine the financial circumstances of Denmark and the United Kingdom?

Mr. Dorrell: Both the monetary committee and the economic and financial committee have the right to examine the conditions in all 12 member states, because the monetary committee, re-formed under article 109c, is exactly the same body as currently exists, is regularly reported on television, and has its roots in the treaty of Rome. The functions of the monetary committee in the indents to which the hon. Gentleman was referring are not changed from the present arrangement; it is only the later indents that add new tasks to the activities of the monetary committee—that is, the last two indents of paragraph 1 of article 109c.

Mr. Michael Spicer: Before my hon. Friend leaves the question of monetary restraints in the second stage, could he say something about article 109m, the question of the common interest as it affects the exchange rate, and the effect that that would have as a constraint on monetary policy, where the exchange rate is apparently being put first, and the monetary policy is subservient?

Mr. Dorrell: I hope that my hon. Friend will forgive me if I return to article 109m when I am addressing the question of the ERM. I am now concerned with the responsibility of the EMI and the extent to which it is a monetary authority.
I have sought to argue that the EMI is not in any meaningful sense of the term a monetary authority. If the Committee looks at article 109f(2), it will see clearly set out the tasks of the EMI in stage 2, and the two leading ones are to strengthen co-operation between national central banks and the co-ordination of the monetary policies of

member states with the aim of ensuring price stability. We do not need at the moment to go into the question whether price stability is desirable. It is a co-operation and co-ordination role; it is not a policy-making role.

Mr. Peter Hain: I am grateful that the Minister is just as generous about giving way in normal debating hours as he was in the middle of the night.
On the specific points about the powers of the EMI and the argument that he is advancing, which puts up a Berlin wall between stages 2 and 3, which I dispute, I draw his attention to article 109j, on page 28, and in particular to the point that is made in the opening sentence:
The Commission and the EMI shall report to the Council on the progress made in the fulfilment by the Member States of their obligations regarding the achievement of economic and monetary union.
We are still in stage 2, but the EMI is reporting on the progress that is being made in fulfilling obligations regarding stage 3. There seems to be a clear contradiction in the Minister's argument there, which shows that the argument that some of us have been seeking to advance—that stage 2 is a precursor to stage 3 and is almost umbilically linked to it—is correct.

Mr. Dorrell: I have not sought to argue that there is not an umbilical link. I have accepted the proposition that, to use a different metaphor, it is a bridge across which we have to pass to get to stage 3. The question is whether this country is under the same obligation as the other member states of the Community to pass over that bridge. The only obligation which arises under article 109j is an obligation to produce a report. The convergence criteria which are set out in that article and are refined in the protocol are criteria against which the report will be judged. That article, in itself, does not impose an obligation on any member state to satisfy those criteria.
I will come back to the question of convergence criteria, how they have developed and how they apply to individual member states later in my speech.

Ms Diane Abbott: The Minister insists on using the analogy of a bridge; he says that stage 2 is a bridge over which member states have to pass. Would not a better analogy be a moving train, and is not the real question whether this is a moving train that we can leave at intersections between stages 2 and 3?

Mr. Dorrell: I am rather wary of analogies about trains and platforms on the whole subject of the European Community. So, if the hon. Lady will forgive me, I will stick to the bridge.

Mr. Bill Walker: Like my hon. Friend, I am not too happy about trains, but I want to ask him about bridges. Surely the question is how long the bridge is and at what point we expect to be on the bridge, and where on the bridge, at any given time. Any careful reading of article 109j shows very clearly, in my view, that, if this were to go to the European Court, it would determine clearly what point on the bridge we were supposed to be at.

Mr. Dorrell: I will, if I may, make a little more progress in my speech, because I suspect that members of the Committee are beginning to think that I am playing into the long grass with no intention of finding the ball again. That, I can assure them, is not true.

Mr. Barry Legg: One point that needs clarification is the fact that the first sentence of article 109j clearly states that member states have obligations. So I hope that we all accept that member states have obligations within stage 2.

Mr. Dorrell: Member states certainly have obligations within stage 2. Indeed, as I shall come on to discuss when we look at the question of convergence criteria, all member states have some obligations in this regard. The point that I shall seek to argue in a minute is that the obligations with regard to convergence criteria that rest on the two member states that have an opt-out from stage 3 are different from the convergence obligations that rest on the other 10 member states.
I come now to the point raised with me by my right hon. Friend the Member for Mid-Sussex (Mr. Renton), the former Chief Whip, whom I always treat with great respect. He asked me to address the question of the independence of national central banks and whether it was true that we would be able to pursue the policy that I described as our policy—to maintain our existing arrangements for the Bank of England unless and until we decided to make the choice to move to stage 3. I will take the Committee through the relevant texts which the Government believe safeguard our right to leave the Bank of England in its present condition indefinitely, unless and until we choose to move to stage 3.
The first text that the Committee needs to examine is article 108, which says:
Each Member State shall ensure, at the latest at the date of the establishment of the ESCB, that its national legislation including the statutes of its national central bank is compatible with this Treaty"—
in other words, provides for independence.
Article 109e provides:
each Member State shall, as appropriate,"—
those were the two words that were regularly missed out by those asking me about these provisions earlier in the debate—
start the process leading to the independence of its central bank, in accordance with Article 108"—
the article that we have just examined. The Committee could be forgiven for concluding that the significance of the words "as appropriate" is a little obscure, but those two words were written in to accommodate the fact that the United Kingdom, under its protocol, has no obligation to move to stage 3, and therefore no need to provide for the independence of its central bank within the terms of the treaty.
The key phrase is "as appropriate". It is the inclusion of those words which exempts the United Kingdom from what would otherwise be a treaty obligation to initiate a process to provide for the independence of the central bank.

Mr. Austin Mitchell: I cannot understand the compatibility between that and the other provisions of the treaty. The protocol on certain provisions relating to the United Kingdom says:
1. The United Kingdom shall notify the Council whether it intends to move to the third stage before the Council makes its assessment under article 109j(2).
We turn to article 109j which says:

The Commission and the EMI shall report to the Council on progress made in the fulfilment by Member States of their obligations regarding the achievement of economic and monetary union.
That is in stage 2, and we will not be going into stage 2 until we give notice that we are not going into stage 3. This is before we have given that notice, and it says that the obligations
shall include an examination of the compatibility between each Member State's national legislation, including the statutes of its national central bank and Articles 107 and 108 of this Treaty.

Mr. Dorrell: The hon. Gentleman correctly observed that the United Kingdom is under an obligation to give notice before the examination, which takes place, not under article 109j, paragraph 1 which we have been examining, but under article 109j, paragraph 2. That obligation arises from paragraph 1 of the protocol. Paragraph 10 of the protocol provides that, if the United Kingdom does not move to the third stage, it may change its notification at any time after the beginning of that stage.
In other words, the position is that we have to give notice before the examination under article 109j, paragraph 2, takes place. If we decide in that notice to join stage 3, clearly that is a commitment and we sign up to the obligation. If we decide not to join, that is without prejudice to our right to change our minds at a later date.

Mr. Mitchell: But the obligation and the examination of our national legislation including the statutes of the central bank, arise under article 109j(1), which we accept before article 109j(2) comes into force. It is under 109j(2) that we shall be giving notice.

Mr. Dorrell: Article 109j(1) does not of itself give rise to obligations. It provides that the Commission and the EMI report on the performance of member states against obligations which arise from outside that article. The argument that I am advancing is that, because of the inclusion in article 109e(5) of the phrase "as appropriate", the United Kingdom does not have an obligation to provide for the independence of its central bank.

Mr. Legg: We are getting to the heart of this point about the United Kingdom's obligations under stage 2. I think that references to the protocol and the United Kingdom option at this stage are probably not appropriate. The United Kingdom, to coin a phrase, is on a level playing field with other member states during stage 2. It may never exercise that opt-out. It is only when the United Kingdom exercises the opt-out that the United Kingdom becomes in a different position from the other l1 member states. That is what is at the heart of stage 2. If my hon. Friend is telling us that the United Kingdom Government intend to exercise their opt-out, as they could do, on 1 January 1994, I should be most interested to hear that.

Mr. Dorrell: No. I have said many times in the course of our debates that the United Kingdom Government do not intend to reach a decision about the desirability of joining a single currency or not doing so until we are far better informed about the nature of the circumstances in which that decision had to be made.

Mr. Budgen: On the construction of the words "as appropriate" in article 109e, paragraph 5, those are words to which my hon. Friend attaches considerable


importance, but the important question there is surely who decides "as appropriate". Is it a subjective decision which is taken by the British Government, perhaps even assisted by the British Parliament; or is it a test of appropriateness which may be imposed upon us by some form of majority will, by the remainder of the countries of the EEC? It is by no means clear that it is a decision which is exclusively within our national power. Knowing, as we all do, the resentment felt against the United Kingdom because of the advantages gained by having a floating pound, it seems to me to be highly likely that "as appropriate" will be "as appropriate" as judged by the other countries.

Mr. Dorrell: All I am seeking is to explain the interpretation that was placed on the words that were written into the treaty by the people who signed it. The writing of the words "as appropriate" in that section of the transitional provisions chapter was intended to accommodate the fact that the United Kingdom protocol gave us a clear opportunity to make a decision later whether we were going to join the single currency or not.

Mr. Gill: May I remind my hon. Friend of the answer that he gave me when I intervened previously, when he said that he could not think that there would be any other nation that would wish to take this nation to court over the justiciability of our opt-out? Is the Minister saying that he cannot envisage circumstances under which other nations of the Community recognise that we have a competitive advantage as a result of the floating exchange rate referred to by my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen), and that they would not therefore wish to take us to court to invalidate the opt-out?

Mr. Dorrell: The point I was seeking to make was that our Community partners unanimously signed up to a United Kingdom protocol which says, in terms, that the United Kingdom is not obliged to join stage 3. The more important of the two points I made in reply to my hon. Friend's earlier intervention is that we are absolutely confident that the protocol is enforceable at law, that its terms are clear, and that there cannot be any reasonable doubt of what the people signing the treaty meant the words to mean.
I want to move on now to deal with convergence, because it is another of the issues which have been raised and about which there is concern in some parts of the Committee. My first point is to stress that the concept of convergence is not new in Community law. It was not invented at Maastricht, or even in the years before Maastricht. When I asked for a trace of the development of the concept of convergence, I was taken back to article 2 of the treaty of Rome, which was signed 36 years ago today.
Article 2 of the treaty of Rome says:
The Community shall have as its task, by establishing a common market and progressively approximating the economic policies of member states
to promote the Community, and so forth. Progressive approximation of economic policy of member states was there in article 2 of the treaty of Rome. It was developed by a Council decision dated the 18 February 1974, which provided in loving detail that the Council was going to hold three meetings yearly

to examine the economic situation in the Community, to adopt guidelines for the economic policy of the Community which each member state
had to follow in order to achieve harmonious economic development and so forth. I will not read the whole decision to the Committee, but in that decision of February 1974, there is not the slightest doubt that there was a clear political will to establish a machinery by consent to take the concept of convergence significantly further.
That decision was replaced on 12 March 1990 by a further Council decision headed "Decision on the Attainment of Progressive Convergence of Economic Policies and Performance during stage 1 of Economic and Monetary Union". Once again, I shall not burden the Committee with the precise commitments and provisions of that decision. It was clearly intended to promote the concept of convergence. In fact, it is the Council decision that first introduced the concept of multilateral surveillance, which finds further expression in the treaty. The principle of convergence criteria—the principle that, as a member state of the Community, we have accepted obligations going right back to the treaty of Rome to approximate our economic policies alongside those of other member states—is not new, and it should not come as a surprise to the Committee.

Mr. Tony Marlow: It may or may not come as a surprise to the Committee, but I am sure that my hon. Friend knows that, in the past, this has always been a pious statement of intent. In terms of achieving anything, there is much more divergence than convergence, and it looks as if that will continue to be the case for a year or two. What is new is that the Commission has the right to initiate beastly reports, which can be put to the Council. By a majority vote, we can have our wrists slapped-a totally undignified state for a sovereign nation like the United Kingdom to find itself in. This is not the slightest bit necessary unless we decide to go for stage 3. Why is it happening so early?

Mr. Dorrell: It is not true to say that there is something new about the idea that the Commission may launch inquiries into the activities of member states. Article 3 of the decision of March 1990 says:
Multilateral surveillance shall focus on the macroeconomic and micro-economic and structural policies. This surveillance will be conducted by the Council on the basis of reports and analyses submitted by the Commission. These shall include:—indicators of economic performance, including monetary and budgetary policies such as supply and demand trends, price and cost developments, employment, regional development, financial markets, public finance, monetary aggregates, interest rates, exchange rates and external imbalances.
That is a pretty impressive list, which is already the basis of reports submitted regularly by the Commission to the Council and considered regularly, before ratification of Maastricht, at meetings of ECOFIN.

Mr. Ron Leighton: Is not the difference that dates are now being set and that Governments are expected to do something? Especially now that we are in recession, attempts by Governments to satisfy convergence criteria will be very deflationary and extremely damaging.

Mr. Dorrell: It is not part of my argument that there is no difference. For the moment, I am seeking to establish that we had already travelled a substantial way down the


road of convergence before getting to Maastricht. What is the nature of the new obligations assumed at Maastricht? Here, I want to develop a point that I made a moment ago. The convergence obligations that rest on the 12 member states as a consequence of Maastricht are divided. The convergence obligations of the 10 member states that are committed to moving to stage 3 are different from those of the other two member states—the United Kingdom and Denmark—which do not have an obligation to move to stage 3.

Mr. Budgen: The recommendations and findings of this committee, if published, might have a very considerable and adverse effect upon the Government's capacity to borrow large sums of money. The £50 billion that the Government propose to borrow next year is massively outside the convergence provisions. I know that my hon. Friend, in his loyal way, would have made a great deal of the then Labour Government's borrowing requirement—much smaller than the current figure—and of their humiliation at the hands of the IMF. Does not my hon. Friend agree that we shall suffer humiliation at the hands of our European partners, and will not this make it even more difficult to raise such an enormous amount of money?

Mr. Dorrell: I should like to make a minor point of detail. My hon. Friend is not quite right to say that the Budget deficit of the period 1974–79 was lower than the one that we are running now. In fact, at that time it peaked at more than 9 per cent—[Interruption.] It is projected to be just over 8 per cent., which is less than 9 per cent. This is a nit-picking point.

Mr. Budgen: The important point is the market point.

Mr. Dorrell: My hon. Friend is on to a good point when he says that there is clearly a difference between a report being prepared and considered in private in ECOFIN and a report being made available, with opinions expressed to the wider world. That arises mainly as a policing mechanism under the budget deficit provisions, which we discussed in the debate on an earlier group of amendments.
As I said in that debate, the purpose of those budget deficit provisions is to recognise that, if we move to stage 3, each nation state in a single currency area will have an interest in reasonable official deficit performance on the part of the other nation states in the area. If official borrowing in a part of a single currency area were to go out of control it would lead to market distortions and possibly to market disturbance, which would damage the interests of member states other than the one that was running the excessive deficit.

Mr. Bill Walker: I should like to draw my hon. Friend's attention to article 109k(6), which says quite clearly:
Articles 109h and 109i shall continue to apply to a Member State with a derogation.
Does that mean that at stage 2 we would have an IMF-type obligation, particularly with regard to our balance of payments?

Mr. Dorrell: Articles 109h and 109i deal with balance of payments assistance. They are already in the treaty. Of

course, they will become otiose at stage 3, as it will not be necessary to give balance of payments assistance to one part of a single currency area.

Sir Trevor Skeet: I am following this argument very closely indeed. The Minister has been developing a point about the revision of the treaty of Rome under article 2. But the final revision, which appears in this treaty, says:
The Community shall have as its task…a high degree of convergence of economic performance".
There is a convergence obligation, which will go right through state 2.

Mr. Derrell: My hon. Friend confirms the point that I was seeking to make. There is indeed a Community convergence obligation. The word used in 1957 was "approximation", which I have interpreted as having substantially the same meaning as "convergence". There has been a commitment to convergence since the day the Community was established. As the Community has developed, more meat has been put on the concept of convergence, and we now have a clearer understanding of its meaning.

Dr. Lynne Jones: rose—

Mr. Dorrell: I want to make a little more progress. I have already been speaking rather longer than was ray intention. However, I promise that I shall give way to the hon. Lady before finishing.
I want to consider the nature of the convergence criteria that are the consequence of the Maastricht treaty. The 10 member states that are committed to stage 12 are committed to crossing the famous bridge. The conditions set out in article 109, which are elaborated in the protocol, take the form of conditions precedent for the establishment of a single currency.
The obligation that rests on the 10 member states which are obliged to join the single currency is an obligation to match those convergence criteria because they are under an obligation to join the single currency. They are therefore committed to the criteria, and there is a clear date and mechanism for their establishment. In the case of ourselves and Denmark, there is not a treaty commitment to join a single currency. So there is not a treaty base obligation to satisfy those specific convergence criteria. That is not to say that this country is not subject to a commitment to converge. I have already accepted that it is.
Nor would I argue that the Maastricht treaty makes no difference to our convergence criteria. I accept the proposition of my hon. Friend the Member for Milton Keynes, South-West (Mr. Legg) in an earlier debate that the words will be interpreted in context. It is true that the convergence criteria set out in the treaty will influence an understanding of the nature of this country's convergence commitment. But it is significantly different from the convergence commitments of those 10 member states which have a treaty obligation to move to stage 3, because we have not committed ourselves to the enforcement mechanisms of the convergence criteria to which they have committed themselves.

Mr. Shore: We have committed ourselves to an obligation to converge, and we have accepted coercive measures which will operate if we do not converge. One such coercive measure is the weapon of publicity and public condemnation. So we are being, as


it were, forced to converge, even if it is not the same kind of coercion as the treaty obligation imposes on the other 10.

Mr. Dorrell: The right hon. Gentleman accepts that there is a fundamentally different convergence commitment resting on this country compared with the other 10 member states.

Mr. Andrew Smith: I wish to follow up a point made earlier by my hon. Friend the Member for Newham, North-East (Mr. Leighton). I accept that the nature of the obligation is different for the 10 than for the two, but there are obligations on the two in the sense that if the United Kingdom wished to move to the third stage, we would, by a certain date under the provisions of the protocol and the treaty, have had to have done certain things.
I put to the Minister the example of the protocol and convergence criteria which would require member states to have been in the narrow band of the ERM without severe tensions for two years. Is it not a fact that if we were to move at the earliest opportunity to stage 3—that is, by the first examination—we would have had by 31 December 1996 to have been for two years in the narrow band of the ERM, so that we would have had to have taken the decision to enter the ERM by 31 December 1994?

Mr. Dorrell: It depends on the date on which stage 3 comes into force, and there is not a fixed date in the treaty. To satisfy the convergence criteria, one must have achieved the objectives for a given time before the point is reached at which one joins stage 3. So the answer to the hon. Gentleman's question is that it depends on the date on which stage 3 comes into effect, and there is no fixed date in the protocol which commits us to reach a conclusion on our opportunity to change our mind.

Several hon. Members: rose—

Mr. Dorrell: I will not give way again. I have permitted many interruptions, and I am anxious to conclude my remarks. [Interruption.] I recall promising to give way to the hon. Member for Birmingham, Selly Oak (Dr. Jones).

Dr. Lynne Jones: I think the Minister accepts that we are obliged to try to meet the convergence criteria, whether or not we decide to go on to stage 3. That implies that we should be joining the ERM or at least pegging the pound to the ecu.

Mr. Dorrell: I do not accept that. I made it clear that I regard the protocol as giving this country a clear choice, on the terms set out in the protocol, whether to join the single currency at a date of our own choosing. The opportunity for this country is that, under the terms of the treaty, we have the opportunity to influence the nature of the single currency. That is the main chance negotiated by the Prime Minister at Maastricht which I am keen for this country to safeguard.

Mr. Cash: On a point of order, Mr. Lofthouse. The Minister makes certain allegations about the date on which the single currency comes into effect. Under the protocol which is adjacent to our opt-out, it is clear that it comes into effect on 1 January 1999. We cannot veto it, and it is irrevocable and irreversible, so—

The First Deputy Chairman: Order. That is in no sense a point of order for the Chair, and the hon. Member knows it.

Mr. Andrew Smith: It is over 25 hours since we began debating the economic groups of amendments. I have said before that it is appalling that, on issues of such importance, we are forced by a combination of the Government's preference and a deal done by the Government with the Liberal Democrats to discuss the issues in a condensed way when hon. Members are tired and we do not have a full opportunity to explore many important matters. Whatever view hon. Members take of the treaty or the Bill, this is a disgraceful way in which to handle such important matters.
I need not detain the Committee for long, not least because much of the territory of the debate overlaps the discussion of earlier groups of amendments. My right hon. Friend the Member for Llanelli (Mr. Davies) took us on a prolonged, perceptive and entertaining tour of the transitional provisions and the protocol of the European Monetary Institute. So entertaining was he that, despite the hour, we were disappointed when, in midstream, he leapt from article 8 to article 23 of the protocol.
My right hon. Friend made great play of the Financial Secretary's description of the Red Book as a set of multi-annual programmes. That was an apposite phrase, considering that this year we have had a multi-annual Budget containing multi-annual tax increases, providing for increases this year, next year and the year after that.
A consistent theme throughout my right hon. Friend's speech dealt with a question which the Government have refused to answer—whether they propose to take the steps necessary to move towards stage 3 of economic and monetary union. When, if at all, do they intend to take that decision? I had hoped that the Financial Secretary would give at least a hint of an answer.
Nor could the Financial Secretary give more clarification of the position of the poor old Governor of the Bank of England under article 8 of the protocol on the European Monetary Institute. He left us with the curious understanding that each of the governors could take instructions from their member states as individual members of the Council, but that none of them could take instructions in their collective capacity as members of the Council.
That was unconvincing and was typical of those whom my right hon. Friend the Member for Llanelli called the Januses on the Government Benches. The measure means either that the governor can be instructed or he cannot. To imagine the capacity in which he can be instructed as a member of the Council is fanciful beyond credibility.

Mr. Leighton: I got the impression from the Minister's response that he is rather agnostic about what we are debating. Does my hon. Friend support the convergence criteria? Does he think that they make sense, considering that they are all monetary in form? They are not concerned with real convergence in terms of growth, output and employment.

Mr. Andrew Smith: I made it very clear in responding to the previous debates that, taking all these criteria together, considerable reinterpretation and reapplication of the criteria is necessary and I intend to develop this point further towards the end of my contribution.

Mr. Austin Mitchell: I am grateful to my hon. Friend because he is generous in giving way, but we are eager on these Benches to know how many basic Labour party principles are going to be chucked away in our enthusiasm for this monstrosity of Maastricht. Would we as a Labour Government, if we were in power, or do we as a Labour party in Opposition, want to invoke the protocol, or do we want to move straight away with the others, as opportunity allows, to stage 3 and to full monetary union?

Mr. Smith: I can best answer that by citing the policy approved by the Labour party conference, which is:
Conference believes that the Maastricht treaty, while not perfect, is the best agreement that can currently be achieved.
That is the basis of our policy and of our approach. I have been through on a number of occasions, and I will return to it later in my speech, the particular importance that we attach to the provisions of article 2a and the goals of high employment and social protection.

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Mr. Hain: My hon. Friend has laid great stress—and he has done so with considerable coherence—on the need for flexibility in interpreting the targets, convergence criteria and so forth. Does he apply the same flexibility to that Labour party motion?

Mr. Smith: I do not, because all of us are lectured on the Labour party manifesto and, as members of the party, it is incumbent on us to take very seriously the policy passed by our party, especially something, I might add, that was passed by such an overwhelming majority.

Ms Diane Abbott: All of us sitting behind my hon. Friend are impressed with his reverence for party conference decisions—

Mrs. Gwyneth Dunwoody: And we will remind him of it.

Ms Abbott: —but does he agree that when conference passed that resolution the text of the treaty was not before it?

Mr. Smith: I think that hon. Members knew full well what they were voting for when they voted for that resolution. [Interruption.] It is not as though arguments within our party, as well as among the public at large, on many of these issues have not continued for some time. I have great confidence and trust in the good sense of ordinary Labour party members when they vote for resolutions at conference.

Mr. Ken Livingstone: rose—

Mr. Smith: I would like to make some progress with my contribution.
I agreed strongly with the points made in the excellent speech of my hon. Friend the Member for Sheffield, Attercliffe (Mr. Betts), a speech which was all the more impressive as its quality betrayed no hint that he had been here all night, waiting to make it. The core of his argument was that Britain will be better able to take effective action for sustainable growth, for jobs, for investment and for environmental protection if we do so within the framework of Maastricht than if we attempt to do so outside it. That is the crucial choice.
Of course there are many things in the Maastricht treaty that we do not like. Of course many of these criteria must be subjected to further interpretation. Of course the whole question of the pace of progress towards economic and monetary union must be carefully examined. But, when it comes down to it, the choice is whether we are better off and can better serve the people of this country in moving towards the goals to which we all aspire by being part of the Maastricht process or whether we should turn our faces against it. Like my hon. Friend the Member for Attercliffe, I believe that we would better serve the people by being part of Maastricht.
My hon. Friend the Member for Attercliffe also rightly pointed out that the Government were directly responsible for many of the weaknesses in the treaty which have been the subject of debate in this group, not least because the Government squandered a great deal of negotiating capital, for example, on securing the wholly damaging opt-out from the social chapter which we on the Opposition Benches are determined to continue to seek to reverse.
Let me turn to our Front-Bench amendments in this group, which have not been a focus of the debate so far. They are important and I want to stress them. Amendment No. 35 would ensure that in the event of the United Kingdom satisfying the necessary economic convergence conditions and other member states deciding to move to stage 3, Parliament would have an automatic opportunity to decide whether this country should proceed to stage 3 and full economic and monetary union. We regard that as a very important amendment and wish to press it to a vote.
As the treaty and the Bill stand, it will be up to the Government to decide whether to propose to move to stage 3. It is left open to them simply to choose not to do so if they so wish. In this way, Parliament could be excluded from a decision which would or could consign the United Kingdom to the second division in Europe. It is surely right, whether or not the Government wish to proceed to stage 3, that the House should have the opportunity to express its view on this decision. That is why we regard the amendment as so important.
Amendment No. 420 is also important in seeking to strengthen and clarify the role of the European Council of Finance Ministers, ECOFIN, in the formulation of economic policy. I do not intend to go over all the arguments and discussions that we had in the night on the importance of ECOFIN. This amendment seeks to ensure that the Government do everything possible to see that the economic objectives of article 2, for which ECOFIN has responsibility under articles 102a and 103, are fully realised.
Should the amendment be carried, the Government would have to inform Parliament of their contribution to ECOFIN in the co-ordination of economic policy and in the achievement of a high level of employment and social protection provided for in article 2, as well as reporting on the work of the European Monetary Institute in preparation for economic and monetary union.
These matters are important. We have argued all along that the overall responsibility for economic policy must remain with elected Ministers, accountable to the European Parliament and to their own national Governments and Parliaments. ECOFIN must become art effective political counterpart to the European central bank. I therefore strongly urge the Committee to support that amendment.

Mr. Marlow: The hon. Gentleman said a few minutes ago that some of the provisions of the treaty needed amending. He has now made a suggestion. He says that ECOFIN must have political control. How will he secure those amendments to the treaty? How will he ensure that ECOFIN gets economic control? These are very detailed provisions in the treaty. How confident is he that, once the treaty is ratified and becomes the bible of the Commission and the European system of central banks, he will be able to get any change out of it? And if he cannot get any change out of it, why does he take it on trust and vote for it now?

Mr. Smith: These amendments do not seek to amend the treaty. They seek to amend the Bill and therefore to determine how the Government—this Government or a future one—should behave in operating the provisions of the treaty, and that is very important indeed, just as, for example, in the previous group, the effect of new clause 56 would have conditioned the information that the United Kingdom supplied to the Commission for the purposes of the evaluation of our compliance or otherwise with the excess deficit procedure. These are not trivial matters: they are important matters both of substance and of signalling the way in which we on the Opposition Benches believe that the treaty might be implemented so as to serve the best 16interests of the British people as well as of the people of the rest of Europe.

Mr. Cash: I am sure that the hon. Gentleman is going in the right direction in trying to improve political accountability; for heaven's sake, Conservative Members regard that as probably the most important central question. We do not want our monetary affairs to be taken over by unelected, unaccountable bankers, but that is what will happen, and that is what the Government are allowing.
Nevertheless, what the hon. Gentleman has just said does not solve the problem. He must bear in mind the fact that the treaty itself has been implemented in European law and that that basis will determine the manner in which it is implemented in the United Kingdom under section 2 of the European Communities Act 1972. I am afraid that the hon. Gentleman is putting the cart before the horse. He has fallen into a trap and his argument has collapsed. He is saying, "We would like to have a system in the United Kingdom that would enable us to implement what we wanted."
Unfortunately, when the matter gets to the House of Lords and, subsequently, to the European Court of Justice, the hon. Gentleman will find that he has been caught and will have to do what the European Community has already decided by treaty. That is the problem that the hon. Gentleman is up against—although I entirely agree with the direction in which he is moving.

Mr. Smith: If the hon. Gentleman agrees with the direction in which the amendments are going—even if he does not accept the reason for which they were tabled—I suggest that the best way of expressing that view is to vote for them. In his lengthy intervention, however, I detected signs of what we already know: that he is absolutely opposed to the way in which the European Economic Community, and subsequently the European Community, has developed. The hon. Gentleman makes no secret of the fact that he objects to the idea of a more closely integrated European Community.

Mr. Cash: The hon. Gentleman cannot get away with that. I have always wanted the European Community to work effectively: indeed, the Foreign Secretary invited me to write a paper on the future of Europe for the Conservative manifesto committee. In that paper, I said that I wanted the Community to work—and, moreover, I voted for the Single European Act. I will not allow the hon. Gentleman to get away with the suggestion that I do not want the European Community to work simply because I do not want this crazy treaty, which will make Europe dissolve and implode.

Mr. Smith: If the hon. Gentleman wrote the part of the Conservative party manifesto that dealt with this issue, he clearly made a bigger hash of it than those who drafted the original Maastricht treaty, given the consequent division and confusion in Conservative policy on such matters. [Interruption.]

The Second Deputy Chairman of Ways and Means (Dame Janet Fookes): Order. We cannot have seated interventions criss-crossing; it makes for confusion.

Mr. Smith: Thank you, Dame Janet.
Let me return to the amendments and new clauses that we wish to press to a vote. New clause 56 aims to ensure that the Government are accountable to Parliament in their fulfulment of the criteria for economic and monetary union. It would require them to observe the need for proper programmes to achieve the objectives of article 2 as they pursue those criteria.
At the heart of the amendments and new clauses, and those in earlier groups, are the provisions of article 2, the bridge between stages 2 and 3 and the way in which those stages can be tied to article 2—which, after all, sets the European Community's task. Article 2 asks for
sustainable and non-inflationary growth…a high level of employment and of social protection, the raising of the standard of living and quality of life".
The Labour party believes that those aims are crucial to progress towards economic and monetary union. Through all the amendments and new clauses to which I have referred, we seek to tie the United Kingdom's interpretation of policy under the treaty more closely to the goals that I have quoted, so that there can be no doubt about the force for social and economic progress that we want our participation in the Community to realise.

Mr. Legg: We have heard some excellent speeches, particularly that of the right hon. Member for Llanelli (Mr. Davies). He told us a good deal about stage 2, the obligations involved in it and the convergence criteria that we are required to follow. By covering so much of the ground, the right hon. Gentleman has made it much easier for me to make my speech.
Let me begin by addressing article 109j—which has been subject to some debate in the Committee—and article 109e. Article 109j sets out the stage 2 obligations for member states: they cover price stability, Government deficits and membership of the exchange rate mechanism. I commented during my intervention on the Financial Secretary's first speech that under stage 2 the United Kingdom has the same obligations as all other member states. Under the protocol, we have the possibility of exercising an opt-out during stage 3 so that we do not move to a single currency; but that will not happen until


stage 3. We may or may not exercise the opt-out. I contend that, until we do so, we shall be on a level playing field with all the other member states.
Yet again my hon. Friend the Financial Secretary has shown a positive attitude, suggesting that Britain wants to be at the heart of Europe and to play a full role in stage 2. The wish to ensure that Britain can influence developments that are happening at that time confirms my view that we are at one with the other 11 states in regard to stage 2.
I know that Ministers such as my hon. Friend the Financial Secretary—and, indeed, the Economic Secretary—often say that the criteria involved are admirable in themselves. Price stability? All Conservative Members agree that we want low inflation. Low Government deficits? Again, Conservative Members generally approve of that. The Committee must, however, accept the overall scheme of the treaty. In fact, the convergence obligations are secondary; the primary obligation is economic and monetary union. We are going through the process of convergence so that we can take part in, and be a full member of, economic and monetary union. That is the rationale of the treaty.

Sir Trevor Skeet: The convergence obligation arises from article 2, but does not my hon. Friend agree that a number of subordinate obligations are involved—for instance, the obligation to return to the exchange rate mechanism at the earliest opportunity? Obviously, we cannot subscribe to the conditions in article 109j unless we are within that arrangement. Moreover, we must have an exchange rate obligation.

Mr. Legg: My hon. Friend has raised a number of interesting and vital points, with which I shall deal later.
Let me retun to our obligations in the treaty, including our obligation to achieve economic and monetary union. My hon. Friend the Financial Secretary claimed that the treaty made no major change in economic obligations; he even suggested that member states should have foreseen all this when the treaty of Rome was signed 36 years ago today. Surely my hon. Friend the Financial Secretary is overstretching his argument.

Mr. Denzil Davies: I ask a question which perhaps I should have put to the Financial Secretary, who was arguing, apparently, that the conditions did not apply to the United Kingdom because there were conditions precedent, as it were, for those who wanted to enter stage 3. Has the hon. Gentleman noticed that the four criteria are described as criteria, and that to enter stage 3 it is necessary to fulfil the necessary conditions? Can he find anything that links the conditions to the criteria?

Mr. Legg: No, I cannot. The right hon. Gentleman makes an extremely good point.

Mr. Budgen: Will my hon. Friend give way?

Mr. Legg: I shall make a little progress and then I shall be pleased to give way to my hon. Friend.
In the Maastricht treaty we are seeing something quite different from that which was in the treaty of Rome. Article 2 of the treaty of Rome dealt with progressively approximating the economic policies of member states. That was loose terminology. We are now changing the objectives under article 2 to include that of economic and monetary union. It must be emphasised once again that

the United Kingdom opt-out does not relate to economic and monetary union. Instead, it is a potential opt-out from stage 3, the single currency.

Mr. Budgen: My hon. Friend takes up the point made by my hon. Friend the Financial Secretary about our obligation under the treaty of Rome. When we first went into the treaty of Rome in 1972 we entered the snake, albeit for a short time. I think that it was for about two months. That was a preliminary attempt to get the United Kingdom into a fixed exchange rate mechanism. As the Committee knows, we came out of the snake. The danger that we now face is that many more legal pressures can be exerted upon us to re-enter the exchange rate mechanism.

Mr. Legg: My hon. Friend has made a valuable intervention. I shall speak about our membership of the exchange rate mechanism later in my speech.
All 12 member states are working towards the objective of economic and monetary union. Article 5 of the treaty of Rome puts obligations on member states to fulfil the tasks that are set out in articles 2 and 3 of the Maastricht treaty. The United Kingdom has an obligation under article 5 to facilitate the achievement of the Community's tasks, one of which is now economic and monetary union. It would seem that the other member states, possibly with the exception of Denmark, are keen to get on with economic and monetary union and do not wish to see one or two other members seeking to undermine their attempts to achieve that goal within the context of the treaty.
Furthermore, under article 5, the United Kingdom has an obligation to abstain from any measure that could jeopardise the achievement of the objectives of the treaty. That means that the United Kingdom must have the objective to abstain from taking actions in its economic, monetary and foreign exchange policies that could jeopardise the attainment of economic and monetary union which is being pursued by the other members of the Community.

Mr. Marlow: I draw my hon. Friend's attention to the speech made last night by my hon. Friend the Financial Secretary. We are, of course, committed to economic and monetary union, but that does not necessarily mean a single currency. There are other ways of achieving economic and monetary union. Perhaps my hon. Friend will tell the House what those other ways might be and what chance we might have of achieving or implementing them.

Mr. Legg: I ask my hon. Friend to be patient. I hope to deal with his point and others in a way that will ensure that they have the necessary cogency.
The Treasury has said that article 109m changes only slightly what is in the treaty of Rome. My hon. Friend the Financial Secretary did not follow that route this evening, and that may be significant. He followed it, however, in Committee on 14 January. When the Treasury submitted a memorandum on the ratification of the Maastricht treaty to the Select Committee on Treasury and Civil Service Affairs, it, too, referred to article 109m, and tried to argue that there was no effective change from our obligations under the treaty of Rome.
I maintain that the common interest that is set out in article 109m is a stronger obligation than the common concern that existed under the treaty of Rome. Secondly, and even more importantly, when it comes to common


interest, we must assess "common interest" and the meaning of it within the context and colouring of the Maastricht treaty. We find that common interest is clearly set out in the treaty, but what is it? It must be economic and monetary union. There is the obligation in article 109m that our exchange rate is treated as a matter of common interest to the other member states, with those states striving to achieve monetary union and wanting the United Kingdom to play its part in that process.

Mr. Cash: I much like my hon. Friend's style. He is taking us, with relentless but clear and cogent force, along the route of reality. I am sure that he will recall the protocol that is adjacent to the one that is supposed to be our opt-out. I am sure that he will agree with me that that makes irreversible and irrevocable that which is due to come into effect on 1 January 1999, come what may. Does he accept, like Chancellor Kohl, that there are those in the Community—most of them in the other member states—who say yes to economic and monetary union, but go on to say that that carries with it political union? That is where the rub comes. We are being taken in that direction.

Mr. Legg: My hon. Friend has made a significant point. It is one that has been made to me by members of the Bundesbank council. They say that there must be a political union alongside monetary union. Chancellor Kohl has made his position clear. Those who go to the Library and consult the Financial Times of 4 January will see set out the Chancellor's commitment to political union and his recognition that monetary union will work only with political union.
The United Kingdom's obligations in the context of the exchange rate mechanism are a source of concern to many of my hon. Friends. Article 109m is directly relevant in this respect. The other member states regard our exchange rate as a matter of common interest to them. I am sure that it will not have escaped the attention of Treasury Ministers that many of our Community partners have been somewhat startled and dismayed by Britain's exit from the ERM. A perusal of the press of the past six months since white Wednesday will elicit a range of comments by our European partners expressing this concern. The French Finance Minister, for instance, cannot understand why we are out and considers it necessary for us to return to the ERM. He cannot see how Britain can ratify the treaty and stay out of the mechanism.
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One does not have to be particularly sophisticated, reading between the lines, to understand the concerns of the Irish Finance Minister, Prime Minister, and Foreign Secretary, at the time of the Irish devaluation, about the financial problems that Ireland faced following Britain's exit from the ERM—especially in view of Ireland's close trading links with the United Kingdom.
Pedro Perez, Spain's Economic Minister, spoke even more forcefully on 23 October about Britain's exit from the ERM. He said that there could not be a single market without a single currency and that there could not be two systems in Europe—an exchange rate mechanism for some countries and a floating currency for others.
When Mr. Delors addressed the European Parliament, he made some trenchant remarks, without naming Britain, about countries that seek to devalue and thereby achieve

a competitive advantage. We know, however, that many of our partners and members of the Commission are trying to play things fairly quietly at the moment, because ratification of the treaty is still in the balance.
Under the Maastricht treaty, member states that are unhappy with Britain's exchange rate policy will have the opportunity to do somethiong about that—

Mr. Cash: The Chancellor of the Exchequer has arrived.

Mr. Legg: I am sure that he does not want to intervene, however, even though he probably has first-hand experience of some of the unhappiness felt by our partners and by Finance Ministers on the continent.

Mr. Marlow: Will my hon. Friend give way to the Chancellor if he will confirm to the Committee that, if we were to re-enter the exchange rate mechanism when article 109m is in force, we would, at a later stage—if the economy demanded it—be able to leave again?

Mr. Legg: I thank my hon. Friend, but I must make some progress. It is certainly true that the treaty will provide the opportunity for our partners to press us, first informally and then more publicly, to return to the ERM. If Treasury Ministers resist that pressure, there are stronger powers in the treaty to compel Britain to return to the mechanism. The matter will not be solely in the hands of the Chancellor of the Exchequer during stage 2.

Mr. Iain Duncan-Smith: Listening carefully to my hon. Friend it occurs to me that we are in the midst of a dispute about the Government's position in respect of stage 3—a dispute between us and Ministers. Bearing in mind the comments of other member Governments so far, when stage 2 has arrived and stage 3 is imminent, who will be forced to decide on the interpretation of our position? It will surely not be our Ministers; it will be the European Court of Justice that will be called to make the decision.

Mr. Legg: My hon. Friend makes one of his now customary interventions in which he puts his finger precisely on where we stand. The intervention will not be for Treasury Ministers or Members of Parliament. Ultimately, it will be for the European Court—

Mr. Bernard Jenkin: A political body.

Mr. Legg: I think that we have already explored that aspect. Certainly, the court will have the power to decide, but I suspect that we will not be taken to the court to compel us to return to the mechanism. The mere suggestion will be enough to ensure that Britain does so.
I believe that many Ministers, perhaps even the Chancellor himself, feel as stongly about membership of the ERM as I and many of my hon. Friends do. The experience of the British economy, of British business and of the British people in the ERM was damaging—[HON. MEMBERS: "Disastrous."] Many right hon. and hon. Members share that view—

The Second Deputy Chairman: Order. I remind the hon. Gentleman that he should be addressing me and that he should bear in mind the practical consideration that his voice will be heard better if he faces the microphones insted of turning away from them—a thought that may not have occurred to him.

Mr. Legg: Thank you, Dame Janet, that is most helpful of you. I am afraid that I was distracted by some sedentary interventions.
Under stage 2, many provisions of the treaty will bring us closer to other countries of the Community in terms of economic policy making. As many hon. Members have said, we will find that we have common economic policies. The Treasury issued a rather strange statement to the Select Committee on Treasury and Civil Service in November 1992. It was about the operation of article 103.1, which concerns the Council of Ministers geting together to devise common economic policies for Europe. The Treasury line on that has been that, if some of the policies or guidelines drawn up under the article are of a sort that Britain would not like—setting out a timetable for a return to the ERM, say, or guidance about budget deficits—the United Kingdom can somehow block them in the Council of Ministers. It can block and spoil the overall economic policy devised by the Council of Ministers. That does not seem to be very much like being at the heart of Europe.
I take seriously the comments from the Government Front Bench about wanting to be at the heart of Europe and wanting to exercise influence. I do not believe that Britain will adopt the role of blocker or spoiler in Europe in stage 2 and in the coming years. I believe that Britain will sit down at the table with its partners and accept the reality of the treaty, the obligations in the treaty, and that it will operate accordingly. Regrettably, I believe that that will be extremely damaging to the British economy.
My hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) referred to previous experiments with fixed exchange rate regimes. To strengthen and legislate for this process, and to include in the supreme law of the European union the requirements to fix exchange rates must, in the current economic circumstances in Europe, be one of the most foolish and unwise economic decisions to be taken in Europe in the 20th century.
The statesmen of Europe, who do not recognise the economic changes in Germany, the costs of reunification, the implication of the borrowing requirement in the unified German state, and the effect that those factors have in transmitting their consequences to other member states through a fixed exchange rate, are playing fast and loose with the economic prosperity of the peoples of Europe. They are also threatening recession, unemployment and worse. The concept of the Maastricht treaty and its obligations are not an appropriate agenda or statutory framework that we should adopt in the mid or late-1990s.
Ministers have suggested that Britain might be able to continue to float its exchange rate during stage 3. Hon. Members should be aware that that idea is even more unlikely than the possibility that Britain can continue to float its exchange rate freely during stage 2. The idea that other member states like France, which had irrevocably fixed their currencies to the deutschmark, would then be content to see Britain floating its exchange rate and obtaining what they would consider to be unfair competitive advantages as a result is clearly inconceivable.
When we move to stage 3, and those other member states have irrevocably locked their currencies, they will expect the United Kingdom—if it decides to exercise the opt-out—to be playing a part in ensuring that monetary union is successful. They will certainly not be prepared to see Britain floating on the margins. I am sure that the

requirements to return to the mechanism and to operate on the narrow bands of the exchange rate mechanism will be fully enforced.
We must then face the reality of the opt-out in stage 3 with Britain locked in the narrow bands against the European ecu. Britain would have no representation on the governing council of the European central bank, which would set interest rates for the ecu, while Britain was tied to the ecu within a narrow band. The governing council of the European central bank would effectively set interest rates for Europe as a whole. Is my hon. Friend the Financial Secretary really offering us that tonight as an attractive proposition resulting from the opt-out?

Mr. Cash: Does my hon. Friend recall that in the middle of the night I produced a document which had been leaked to me? That document stated quite explicitly that advice was being tendered, apparently to Ministers, after white Wednesday on 23 September last year, which clearly stated that the conclusion was that sterling should go into the narrow band. Does not my hon. Friend find that a very chilling observation?

Mr. Legg: Yes, that is a chilling observation, but hon. Members should not be surprised by it. In 12 months' time, I hope that hon. Members will not come to Members like me and express surprise if events such as that described by my hon. Friend the Member for Stafford (Mr. Cash) occur.

Mr. Budgen: Why on earth should that be chilling? The Government have consistently said that they wish to approve the Maastricht treaty. They claim that they have democratic authority for that, having discussed it fully at the last general election and because there is widespread support for it. Plainly, we must return to the ERM as quickly as possible to fulfil our obligations on 1 January 1994. It would be monstrous if we were not trying to get back into the ERM.
Presumably, we will hear from the Government tonight a clear indication of how they believe the ERM has worked to the benefit of the British people during the two years we were a member of the ERM. If this is only the preliminary period, we must assume that the Government regard it as having been a very successful one.

Mr. Legg: Once again, my hon. Friend has made a valuable point.
I conclude with an argument which is not often heard in this Committee, but which is put forcefully in the Corridors and elsewhere in the House. That argument seems to be particularly attractive to right hon. and hon. Members on the Conservative Benches and even to Ministers. That argument is that there is no need to worry about the Maastricht treaty because its provisions will not be put into effect. The treaty is so deeply flawed and runs so strongly against the economic fundamentals to which I have referred that people say, "Don't worry. Support the treaty: it will not work." What a gamble that is to take with the future of the British people.

Sir Trevor Skeet: The people should have a say.

Mr. Legg: As my hon. Friend says, they should have a say in that gamble.
I urge all hon. Members to act with caution in this matter. They should not rely on assurances that what I


have described will not happen. Hon. Members who visit our partners discover that there is a strength, will and determination for those things to happen. There is a strong commitment on continental Europe to economic and monetary union. There are many, what I would call unionists rather than federalists and they are strongly committed to such concepts. Hon. Members must weigh in the balance the benefits of the treaty against its risks, which are considerable.
The House has many honest federalists, with certain views about Europe and Britain, who have put their case clearly and powerfully. I respect those people. It is a good process to indentify what Europe would be like under the Maastricht treaty. If the case for Maastricht was spelt out and the British people gave their full-hearted consent to the treaty, I would be happy to work to try to achieve their vision of the future. My great fear, however, is that those people will not realise the implications of the treaty. We will face continuing disillusionment, unhappiness and lack of success in our affairs for many years.

Mr. Christopher Gill: Will my hon. Friend give way?

Mr. Legg: I will not take any more interventions.
I urge hon. Members to be cautious and not to gamble with the future of the British people. They must realise that what they are doing now is ratifying the supreme law of the European union.

Mr. Leighton: We are faced with an odd situation. The Government did not want a conference at Maastricht and they did not want the treaty. They have not said that they are in favour of monetary union or a single currency and they claim that they can exercise an opt-out from the treaty. I do not know how valid that option will be. As far as I am aware, the Opposition do not want an opt-out. They are all in favour of monetary union and a single currency. This odd situation is what psychiatrists term role reversal.
My hon. Friend the Member for Oxford, East (Mr. Smith) relies upon article 2 of the treaty for the basis of his support of it. We cannot take comfort from that article, because the treaty of Rome has a general, motherhood-and-apple-pie clause that contains vague good intentions, but what good has it done us? We now have between 17 million and 18 million people unemployed in the Community—the unemployment black spot of the world—so what good have those words done us?
I do not think that any socialist can support the Maastricht treaty. I base that claim on article 105 of chapter 2, with which I am sure my hon. Friend the Member for Oxford, East is familiar. Article 105(1) states:
The primary objective of the ESCB shall be to maintain price stability. Without prejudice to the objective of price stability, the ESCB shall support the general economic policies in the Community with a view to contributing to the achievement of the objectives of the Community as laid down in Article 2.
That is without prejudice to price stability and I do not believe that there can be any doubt that article 2 is subordinate to price stability.

Mr. Clive Betts: I believe that article 105 then goes on to provide a commitment to article 3a, which is in the treaty simply for the purpose of

delivering article 2. One could read that part of article 105(1), which relates to article 3a, as unqualified support for article 2. I accept that the treaty is badly worded, but there are different ways of reading it.

Mr. Leighton: I do not believe that article 105 is badly worded; it is specific and states:
The primary objective of the ESCB shall be to maintain price stability.
There is no ambiguity about that. It could not be clearer. The objectives laid down in article 2 are set without prejudice to the objective of price stability.
When this matter was raised before, one of my hon. Friends asked me whether I was in favour of price instability. Other things being equal, we would, of course, like low inflation, but since when has it been the sole policy of the Labour party to argue for price stability? Any fool can reduce inflation by destroying the economy, creating mass unemployment and bringing about a recession. That is what the Government have done, but they have now had to pull back.
The "Bank Briefing" for November 1992, published by the Bank of England, referred to price stability and stated:
Had the United Kingdom remained in the ERM, it is quite possible that price stability would have been achieved during next year"—
which means this year.
Although clearly desirable in itself, price stability attained so quickly might have intensified the problems of domestic debt inflation. Some easing of policy was, therefore, desirable.
We could have had that wonderful price stability, but it was causing so much trouble that it was dropped as official Labour party policy. My hon. Friends on the Opposition Front Bench should note that we want some price stability and low inflation, but we have other aims. We want balance of payments equilibrium, growth in the economy and high employment.
Article 2 makes no mention of high employment. Thousands of words, as well as protocols, have been printed about Euro-monetarism and price stability, but there is no mention of high employment, apart from a passing reference in article 2, which is itself subordinate to the idea of price stability. That must be anathema to socialists, and it is on that basis that I oppose the treaty.
The convergence criteria are all monetary; they are about inflation and budget deficits. There is nothing about real convergence, real growth and real people. Flesh and blood will be subordinated to the theory of money. Money will be the master, not the servant. I cannot for the life of me understand how the Labour party could support such an idea.

Mr. Budgen: I suspect that an observer of this protracted but useful debate would say to himself, "Well, they have, with great difficulty, defined what the position will be under stage 2, which is plainly the ERM with a large number of additional constraints added to it." No doubt that observer would say to himself how grateful he was for the elegant guidance that the right hon. Member for Llanelli (Mr. Davies) had given to the Committee to help us to decide the possible extent of those additional obligations.
The practical man listening to the Committee's deliberations, however, would say, "Surely, these chaps"—I must be careful—"these persons are not going to


recommend going into stage 2 unless it is obvious that stage 1 was a great success, because stage 2 is stage 1 with knobs on."
If we had found that stage 1 was such a great success, we might think of going forward, tentatively, to stage 2. If, however, stage 1 was a vast disaster which brought poverty, sadness and unemployment to the British people and was still exercising its most malign influence upon our economy, surely we would think rather carefully before going forward to a worse condition than that provided for in stage 1.
The disgrace of the Government's position is that they cannot say that the ERM was a success. They cannot do other than admit that the present condition of the economy does not result from the Government's wisdom, forethought, brilliance, or anything of that sort. We may reasonably hope for some recovery in the economy, not because of the Chancellor of the Exchequer's brilliance but because of the good fortune that speculators speculated against the pound and threw us out of the ERM, and because our central bank, having lost £3·5 billion of taxpayers' money, took the view that we could not afford to buy our pounds any more and stay in the ERM. The ERM was an absolute disaster. It is important to understand that the state of the economy when we came out was near to being in a credit crunch.
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Perfectly sensible, kindly, respectable business men ask, "Aren't you wasting an awful lost of time making a nuisance of yourself to the Government? Don't you think it would be better to think of ways in which you can help the Government to resuscitate the economy?" But most of the problems that business men have stem from the ERM. They ask, "What are you doing with the clearing banks? Why don't you get the clearing banks to lend more money to small builders?" The reason that clearing banks cannot lend any more money to small builders is that the clearing banks and the small builders are on the verge of going bust.
The clearing banks went in for a lot of silly and excessive lending between 1986 and 1988, a period when we were shadowing the deutschmark and when what could be described as the most disastrous Chancellor in recent history was talking about an economic miracle. At that time, the banks were lending far too much money to commercial property. They are now finding that their credit base is severely eroded, so severely eroded through the large losses that they suffered because of high interest rates that they cannot come to the aid of small business, as no doubt they would wish to do. That, I repeat, all stems from the ERM.
I remind my hon. Friend the Financial Secretary that it used to be the theory of the Conservative Government that we were, broadly speaking, monetarist, and that a change in the money supply took between 18 months and two and a half years to come through into the real economy. There has been a remarkably large relaxation of monetary policy since 16 September. It is not at all surprising that that relaxation is not yet fully showing itself in the economy.
But the irony is that, if we ratify the Maastricht treaty, only when we are under a legal obligation to go into stage 2 on 1 January 1994 shall we be finding that the relaxation, consequent upon our good fortune on 16 September, is starting to work through. We shall then find ourselves under a legal obligation to abort the good fortune of the

monetary relaxation that has occurred since 16 September. The green shoots will be nipped off once again by the frost of economic and monetary union in its incipient stages.
Surely we should be explaining to those confused people who hoped that that was all part of being at the warm, friendly heart of Europe that that is the basis for yet more deflation to be imposed upon us by the Bundesbank, which will give rise to yet more trouble in our lending institutions.

Mr. David Winnick: I am grateful to the hon. Gentleman, who always argues his case on these matters so well, for giving way. Does he agree that the conventional wisdom at the time—some of us, certainly including me, and, I am sure, the hon. Gentleman too, argued against it—was that the ERM was a necessity for the British economy and that it would be wrong for Britain for us to remain outside. That was the argument put by the Government and, unfortunately, by some Opposition Members. It was said that it was an inevitable step—the same argument that is being used on integration under the Maastricht treaty. Have we not been proved right, at tremendous cost to the British economy, on the ERM, and will we not be proved right again if, as the hon. Gentleman says, we go into stage 2 and return to the ERM?

Mr. Budgen: That was not much of a critical question. The hon. Gentleman was simply intervening to say that he agreed with me, albeit that he used rather different language.

Mr. Allan Rogers: I too congratulate the hon. Gentleman on marshalling his arguments and putting them forward in such a congent manner, as he always does. In doing so, he is projecting an image of being an objective commentator on the economic scene. Can he list the number of times and the occasions on which he objected or voted against the Government who introduced the policies that he is now condemning?

Mr. Budgen: I am consistent on that. I opposed the shadowing of the deutschmark between 1986 and 1988 and I voted against the ERM on every possible occasion. I do not remember ever being ill; I have quite good health. As far as I remember, I have voted against this European economic entanglement on every possible occasion. That does not mean that I am right, but it does mean that I have been consistent.

Mr. Rogers: I was not thinking particularly of the hon. Gentleman's voting record in relation to Europe, although I presume that he voted with the Government on the single market issue.

Mr. Budgen: No.

Mr. Rogers: If he says that he did not, I accept that. The hon. Gentleman talks about the Government's policies and the bank's inability to lend to small businesses, but when did he ever raise his voice against the Government's economic policies?

The Second Deputy Chairman: Order. I hope that we can keep to the substance of the debate.

Mr. Budgen: I respectfully agree, Dame Janet. I would simply say to the hon. Gentleman that I have done my incompetent best to raise these arguments fairly


consistently over the years. I am sorry if I have not brought them to his attention, but I have done my best to bring them to other people's attention from time to time.
However, the Committee is interested not in my record but in the effect of the Government's disastrous policy on the British economy. The point that I wish to make as firmly as I can is that the only intellectually respectable argument that the Government could put forward tonight would be to say that the ERM had been a success and that, because of the success of stage 1, they wanted to build on that and move to stage 2.
The ERM has been a proven disaster. It has been a disaster in that it has cost us £3·5 billion in lost resources. It has been a disaster in that it has been a proximate cause of 3 million people being unemployed and has caused a credit crunch from which it will take us many years to recover. It has been a disaster in that it has created untold sadness for many people in the south-east who find themselves locked into houses that are now worth far less than the cost of their mortgages. It has been an utter disaster, which has been pursued not for economic reasons, but for political reasons.
Only a Government who were completely impervious to their mistakes and to the appalling humiliation of 16 September could have the effrontery to say, "Never mind all these proven disasters. Let us go into stage 2 at least at the beginning of January, cutting off the freedom that we have enjoyed since 16 September. Let us chastise the British people with a system that is even worse than the ERM."

Sir Russell Johnston: I have noticed over many years that debates on the European Community seem to attract to a disproportionate extent those who are generally opposed to progress in the Community. At the end of debates, one gets a rather lop-sided view of the balance of opinion, and the Committee is following that trend. I do not say that in praise of those who hold the views that I hold; on the contrary, the critics are more loyal in their appearance and in their contribution. I hope that the hon. Member for Wolverhampton, South-West (Mr. Budgen) will forgive me for not following directly his remarks, which I have heard him enunciate so fluently so often.
Although I disagree with the hon. Member for Milton Keynes, South-West (Mr. Legg) about Maastricht, I admit that he made a direct, forthright and logical speech. I thought that his catalogue of attitudes and responses within the rest of the Community to our economic and monetary union opt-out dealt most effectively with the Government's presentation, which is that they have somehow secured a unique discretion without losing any influence. I do not think that that is right.

Mr. Jenkin: Does the hon. Gentleman agree that the whole basis for the Government's position on the Maastricht treaty is that we are winning arguments all around Europe and that the direction of the Community will be away from a federal Europe? The speech by my hon. Friend the Member for Milton Keynes, South-West gave one example of one area of policy in which there is no evidence to support the Government's view that they are changing the mood of the European Community. Does the hon. Gentleman agree?

Sir Russell Johnston: I completely agree with that. The hon. Member for Milton Keynes, South-West quoted a number of individuals. One can quote many more. At one point in the Committee, Martin Bangemann was quoted endlessly as if he had suddenly said something startling, new and different. I have known him for years and he has been saying the same thing non-stop. It is the same with all the others.
Nevertheless, the Liberal Democrats remain committed to the things that the hon. Member for Colchester, North (Mr. Jenkin) and the hon. Member for Wolverhampton, South-West are against. Our position has been and remains distinct both from the position of the Government and from the position of Labour Front-Bench Members. For different reasons and to different degrees, both find the prospect of full economic and monetary union and the development of the ecu difficult to accept, although both have moved a long way.
The arguments against EMU have a great tendency to be based on emotion as much as on economics, although, in my humble and not very informed opinion, much of economics has a theological aspect to it. People believe passionately in certain economic solutions on the basis of certain theories which sometimes they find it difficult either to prove or to disprove. I believe that the arguments for EMU and for the single currency have an irresistible logic, whereas many of the contrary arguments tend to be conducted at a rather surreal level.

Mr. Bill Walker: The hon. Gentleman's integrity in terms of his views on Europe cannot be in doubt anywhere. Does he base his views on EMU and on all the other matters to do with political and economic union on the belief that they will be good for the people of the United Kingdom and good because they will help us as a trading nation to trade better? If he does, how does he square that with the fact that the Japanese appear to trade better than any of us do, although they do not enjoy any of the so-called benefits?

Sir Russell Johnston: The situation in Japan and the situation in the United Kingdom are dramatically different. The arguments about access to a large market are part of the arguments that have been used throughout in respect of the United Kingdom's membership of the Community. A new trading pattern has developed as the old trading patterns with the Commonwealth have slowly declined. Japan's industrial structure is so different that it is difficult to make direct comparisons.
Much of the argument focuses on the points raised by the hon. Member for Northampton, North (Mr. Marlow), the main intervener, who has now vanished. He always talks about national sovereignty, which affects people's thinking about what is possible economically. Many people's thinking is based on a complex of beliefs which are still held almost as a matter of religious faith. It is believed that we are better, that we are more efficient, that we have better laws, that we are more democratic and that we are more able to trade in the world than to be successful in the Community.
It is difficult to argue with all those ideas, because people believe in them deeply and passionately. I recognise that because I have been listening for the best part of 20 years to the arguments of those who are against Europe. It is not that I do not know the arguments, or that I do not


respect the people who hold them. I have reached the conclusion that I shall never persuade them, and they may have reached the conclusion that they will never persuade me—[Interruption.] One sometimes wonders why we continue to debate the matter.

Mr. Winnick: It is called democracy.

Sir Russell Johnston: I suppose that democracy is about peaceful persuasion.
In the history of the Community, we have been guilty of many missed opportunities. The opt-out, which is a major part of our debate today, is one such missed opportunity and another example of our excluding ourselves from mainstream developments as a result of economic weakness, of shortsighted nationalism and of political delusion.
For those reasons, when the Bill first came into Committee, we tabled amendment No. 400 which aimed to delete the protocol and, as a consequence, the United Kingdom's opt-out from stage 3 of EMU. Such an amendment would now have the consequence of wrecking the treaty, so we shall not press it to a Division. However, we support the Labour party's amendment No. 35, which seems to be a positive contribution, because it would allow parliamentary affirmation before moving to stage 3, which would be perfectly reasonable if the economic convergence criteria laid down in article 109 were established.
We shall not support Labour's amendment No. 420 or new clause 56. We do not feel that they are necessary, despite the arguments advanced by the hon. Member for Oxford, East (Mr. Smith), to which I listened carefully.
Long before Maastricht, we were in favour of a single currency. The arguments in favour of economic and monetary union, such as the elimination of exchange rate uncertainty, are well rehearsed. I do not accept the catalogue of ills that the hon. Member for Wolverhampton, South-West attributed to our membership of the exchange rate mechanism. During our period of membership, like myself, he spoke to many business men, who are quite given to writing to one about these matters. They emphasised that they wanted to know what price they could offer in advance. They wanted some stability rather than the loss that resulted from unpredictability.
I am rehearsing old arguments, but it is recognised that the collapse of black Wednesday was related not to the intrinsic weaknesses of the system but to the fact that the level at which we joined was too high to sustain and to our subsequent refusal to realign although the opportunity to do so existed. It is not altogether fair to make the accusations that the hon. Gentleman made. Considerable savings would be made by the elimination of transaction costs, the obvious example of which is for the individual but it is also noticeable for business.
The ecu undoubtedly would become one of the world's three major currencies, with the dollar and yen. I shall quote Sir Leon Brittan, which I do not do often.

Mr. David Harris: Why not?

Sir Russell Johnston: I shall not go into that.
In 1990, Sir Leon said:
Birmingham is considerably closer to Calais than to Glasgow. But even when the internal market is fully in place, selling from Birmingham to Calais is going to be more

complicated, slower and more expensive than selling to Scotland, simply because, although we have a single market, we do not yet enjoy the benefits of a single currency.
I accept that argument.
The benefits of EMU, in addition to the ones outlined above, which are specific to a single currency, are based mainly on the assumption that this will render economic policy more effective by having it conducted, or major elements of it conducted, at a more appropriate level—by which I mean supranational level—and because economic policy will in any event be heavily influenced by the Community countries that are most successful. It is increasingly clear that macro-economic policy can no longer be effectively controlled independently by individual European Community states. Black Wednesday was not the only example of that.
We are unequivocally committed to a federal union. The Maastricht treaty, despite the Government's denial, represents a significant step towards such a European union. The hon. Member for Milton Keynes, South-West quoted Chancellor Kohl, saying that political union is meaningless without economic and monetary union. That is undoubtedly true. The Government's recognition of that was reflected in their lack of enthusiasm for a supranational structure and their desire instead to concentrate on intergovernmentalism, which led to the three-pillared structure of the treaty.
The core of the treaty, including the economic sections, is clearly within the supranational institutional core of the Community, which makes our opt-out all the more tragic. I take the Minister's point about continuing to participate in policy making on EMU, but, like the hon. Member for Milton Keynes, South-West, I think that a semi-detatched position does not increase one's influence.
We must recognise that the problems facing economic and monetary union are great indeed. Many circumstances have changed since the treaty was first negotiated, and the timetable in particular will have to be reviewed. One cannot be optimistic about the possibility of maintaining it. The convergence criteria—inflation performance, Government debt, membership of the narrow band for two years and the durability criteria reflected in long-term interest rates—may prove to be too strict within the confines of the current timetable. Last year, if I remember correctly, only two countries met those requirements—France, which is not looking forward to such a good position now, and Luxembourg. Even Germany did not meet them. Clearly there can be no monetary union without the deutschmark; that would be quite unthinkable. The problems will be overcome only if member states work together to resolve the reorganisation of the ERM, the problems of the timetable and the difficulties caused by convergence criteria. The economic and political advantages to be gained by full economic and monetary union in the interdependent world in which we live seem well worth fighting for.
The opt-out and our non-commitment to move to stage 3 occupied much of the Financial Secretary's speech. We regret the opt-out and, logically, regret the unwillingness of the Government to take the other consequential steps, particularly making the Bank of England independent as a prelude to the establishment of one European Community central bank.
It is not often that I agree with the hon. Member for Wolverhampton, South-West about European issues, but his interventions on the basis of his experience with the


Treasury and Civil Service Select Committee in France, Spain and Germany were very apposite and foreshadowed what we certainly fear; that our opt-outs will either relegate us to some subordinate position or compel us to adhere to or to shadow what other people determine.

Sir Trevor Skeet: I have listened to the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) at length. Perhaps he will excuse me if I do not pursue him. Having been up all night, one is wilting a bit at this stage, so I shall cover the main points that I have in mind.
The most significant feature of last night's debate was that we covered three important groups of amendments on the banking system, economic policy and deficits, EMU, and traditional and second and third stages in the course of 24 hours. That is absolutely critical to the Government, because the success or failure of Maastricht will depend on monetary union and a single currency. It might have embarrassed the Government considerably if the arguments that we have been advancing appeared in local newspapers and on local radio. It is interesting that, of the 24 groups of amendments, only three relate to the economy, banking and the two stages. It is almost unique that these matters have been swept aside. After all, we are the representatives of the public and we are putting the arguments to them. If they cannot hear us because it is not recorded, they will not read them because Hansard is read probably only by ourselves.
There is another interesting point. Stages 1 to 3 will take us virtually from today through to 1 January 1999. We know that, under article N, we shall be renegotiating the treaty in 1996. Why are we legislating so far ahead when there are so many difficulties involved in passing the treaty? It would have made more sense not to have legislated to cover that period and instead looked at it carefully and decided, in 1996, whether we wanted all the convergence to go ahead to lead us to a single currency.
8.30 pm
My hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen)—who has left the Chamber—spoke about rejoining the ERM. I agreed with his analysis. We have no alternative. It is obligatory that we rejoin the ERM. The wording of some of the articles show that it is one of the criteria. For example:
The observance of the normal fluctuation margins provided for by the Exchange Rate Mechanism of the European Monetary System, for at least two years, without devaluing against the currency of any other Member State".
If that is one of the criteria, and we are outside the exchange rate mechanism, we shall have to get into it again to qualify for stage 3. That is only reasonable.
There is another way to look at it. According to article 109m:
Until the beginning of the third stage, each Member State shall treat its exchange rate policy as a matter of common interest.
That is an obligation that arises under the treaty.
The obligation on the EMS and the exchange rate mechanism is important. However, there are certain subsidiary obligations. Convergence, which I regard as extremely important, arises from article 2. Hon. Members who have spoken in the debate have raised that point on several occasions, so I shall not go over the same ground. I have spoken of article 109m, which sets out the exchange rate obligations, but I have not mentioned article 102a,

which contributes to the achievements or the objectives of the treaty. That is another obligation that cannot be avoided. Article 103 says that we must agree with the economic policy of the union.
Let us have a look at those two. Article 102a says:
Member States shall conduct their economic policies with a view to contributing to the achievements and objectives of the Community".
That is an obligation because member states "shall" do something. There is no way to avoid that. Article 103 says:
Member States shall regard their economic policies as a matter of common concern and shall co-ordinate them within the Council, in accordance with the provisions of article 102a.
All those articles set out obligations under stage 2. They apply to the United Kingdom fully, as they apply to all the continental states. We have the option to opt into stage 3 if we wish to do so. Then, things alter, because we go over to the protocol and there are general dispensations and derogations at a future date which may be of advantage to us.
The interesting point about the debate in the past 24 hours is that many matters of concern to us—given that many people in Europe will be excited if we do not fulfil our obligations—are incompatible with Community obligations. For example, that is true of the floating of the exchange rate under both stages 1 and 2. If the other nations ventilate their complaints, that could lead to litigation before the European Court of Justice, which in turn could force the United Kingdom back into the ERM. I shall not go into it fully, but I shall set out some of the implications of a breach of that. The court could order us to return and impose a fine under article 171. There could be retaliatory action. All that would arise from that article.

Mr. Dorrell: This may be something of an abuse of our procedures, but I want to correct a statement that I made earlier in answer to an intervention from the hon. Member for Oxford, East (Mr. Smith). He asked me whether he needed to decide next year whether we would join the single currency. I replied that we had no such need and that our protocol allows us to exercise our option to join a single currency either at the time of the original report under paragraph 2 of article 109j or at any time after the start of stage 3. I also said that the convergence criteria were assessed for the period before the start of stage 3. That was wrong. The convergence criteria are assessed under the convergence protocol for the period before the submission of the report.

Sir Trevor Skeet: I am obliged for that clarification. If we decided to opt into stage 3, the protocol will begin to apply. Certain clauses will not apply to the United Kingdom. It is entirely different with regard to the ERM. The Minister has said that the Government would return the United Kingdom to the ERM when it was convenient to do so. However, that is conditional upon us returning at an early date.

Mr. Bill Walker: The Government have always said that we would return to the ERM when the conditions were right. In stage 2, the conditions are put in there under the statutory obligations.

Sir Trevor Skeet: That is correct. On one occasion, I heard the Chancellor say that the ERM was the best thing that he had ever entered. At a later date, he decided that he would have to come out of it. The Prime Minister shared that view. It is a big man who can think again and


decide that it is best to get out. However, we are caught by the treaty and our obligations. If the other member states feel that, because of the size of the exchange rate and because we have a floating rather than a fixed currency we have an advantage, they can make complaints before the court and so force us back into the ERM, which could be damaging for the United Kingdom.
Those who qualify for going into the third stage cannot be identified at the moment. The conditions for the successful applicants are set out in article 109j. We know them well. They include inflation at the correct level, a satisfactory budget balance, a reasonable level of general Government debt and long-term bond yields at a certain rate. Figures that I got from the Treasury in February this year show that only one country would qualify—France. We cannot have entry into the third stage if only France is capable of doing so. The Bundesbank is important to Germany and to the whole Community. Germany is a bigger nation than ours, with 70 million people, and will obviously have to be there.
Established criteria mean something. We either walk through the portals and get into stage 3, or we are frustrated and cannot get in. That is a twin-speed Europe. It is no use saying that we will not have a twin-speed Europe; it is inevitable from the very conditions laid down in article 109j. Some nations will be getting away much faster than others, and at this stage it looks as though the United Kingdom may be in the slow lane. I hope not. I believe that several years ahead we may be able to improve our chances. At the lower end of the list there will be Portugal and Spain; at the higher end there will be Germany and France, and probably Luxembourg, the Netherlands and Belgium. That would make a fairly strong unit. This need not unduly upset the United Kingdom, which is extremely resourceful and has shown its resourcefulness over the years.
Switzerland is an example worth noting. It was invited to join the Community, but refused to do so, on the ground that it was extremely successful outside the Community. Its living conditions are excellent. Austria, too, is doing well. But many other countries would like to get into the Community at some stage in the game.
I ask the Committee to bear in mind the fact that we are but 12 nations, and two have a right of exemption in stage 3. When we add another four countries by 1996, and probably another four after that, what will be the situation in Europe? Will the Community collapse, or will it be held up by its own braces? I am very concerned about this, and I believe that more information should be made available to the public so that they can come to the right conclusions in time.
The Financial Secretary has said that he is quite prepared to go back into the ERM, on his own conditions, when the time is ripe for the United Kingdom. But we have heard other versions of this. We have heard that the time will be ripe only when German interest rates fall. I believe that the Prime Minister has said, too, that the time will be ripe only when the flaws in the situation are removed. What are the flaws? They have never been identified.
Schlesinger has said that there are no flaws and that he is quite prepared to abide by existing arrangements. Others have suggested that perhaps the yen and the dollar should be admitted before we get to stage 3. I do not know; I am concerned and I think that we should look into the whole matter very carefully before we make the final move.
I will say one thing with absolute certainty: while I agree that there is a two-speed Europe and there is likely to be one, I would not like to see a Bonn-Paris axis. That could be as dangerous as the situation that we had many years ago.
I suggest to the Committee that, before rushing to ratify the treaty, we think of some of the strange consequences that could overwhelm us. Russia now is on the brink of civil war—but I will not go too far down that road, Mr. Morris. There are other significant movements in Europe. The former Yugoslavia is upside down and is developing some resources, which will be discussed in the next series of amendments. I will not go too far down that road, because you might check me, Mr. Morris. I am always willing to oblige and, if I am wrong, I will make myself right. There are complications in Europe. We do not know what the situation is likely to be in France with a new right-wing Government. I will not go too far down that route, because I would be checked then also.
We are dealing with the three stages. On the acceptance of Maastricht, we will be in stage 1. On 1 January 1994, we will be in stage 2. We will amble on like everybody else through all the conditions, convergence principles, and so on, complying with the treaty, and complying with the small print, which many people have not been prepared to follow. Then we will come up to stage 3. Shall we go in or shall we remain outside?
We will have no option. We will come to that point and the Prime Minister will say that it is right for the United Kingdom to enter the third stage. By that time the spring will have sprung. It will be irrevocable. There will be fixed exchange rates and we will be tied to Europe, tied to the most powerful country. The most powerful country, of course, will be Germany; it is very competitive and it can destroy our economy.

Mr. Irvine Patnick (Lords Commissioner to the Treasury): rose in his place and claimed to move, That the Question be now put.

Question put, That the Question be now put:—

The Committee divided: Ayes 277, Noes 195.

Division No. 212]
[8.46 Pm


AYES


Adley, Robert
Bottomley, Rt Hon Virginia


Ainsworth, Peter (East Surrey)
Bowden, Andrew


Aitken, Jonathan
Bowis, John


Alexander, Richard
Brandreth, Gyles


Alton, David
Brazier, Julian


Amess, David
Bright, Graham


Ancram, Michael
Brooke, Rt Hon Peter


Arbuthnot, James
Brown, M. (Brigg & Cl'thorpes)


Arnold, Jacques (Gravesham)
Browning, Mrs. Angela


Arnold, Sir Thomas (Hazel Grv)
Bruce, Ian (S Dorset)


Ashby, David
Bruce, Malcolm (Gordon)


Ashdown, Rt Hon Paddy
Burns, Simon


Atkinson, Peter (Hexham)
Burt, Alistair


Baker, Nicholas (Dorset North)
Butterfill, John


Baldry, Tony
Campbell, Menzies (Fife NE)


Banks, Matthew (Southport)
Carlile, Alexander (Montgomry)


Banks, Robert (Harrogate)
Carlisle, Kenneth (Lincoln)


Bates, Michael
Carrington, Matthew


Batiste, Spencer
Channon, Rt Hon Paul


Bellingham, Henry
Chapman, Sydney


Beresford, Sir Paul
Churchill, Mr


Blackburn, Dr John G.
Clarke, Rt Hon Kenneth (Ruclif)


Booth, Hartley
Clifton-Brown, Geoffrey


Boswell, Tim
Coe, Sebastian


Bottomley, Peter (Eltham)
Colvin, Michael






Congdon, David
Hunt, Sir John (Ravensbourne)


Conway, Derek
Hunter, Andrew


Coombs, Anthony (Wyre For'st)
Jack, Michael


Coombs, Simon (Swindon)
Jackson, Robert (Wantage)


Cope, Rt Hon Sir John
Johnson Smith, Sir Geoffrey


Cormack, Patrick
Johnston, Sir Russell


Couchman, James
Jones, Gwilym (Cardiff N)


Curry, David (Skipton & Ripon)
Jones, Ieuan Wyn (Ynys Môn)


Dafis, Cynog
Jones, Nigel (Cheltenham)


Davis, David (Boothferry)
Jopling, Rt Hon Michael


Day, Stephen
Kellett-Bowman, Dame Elaine


Deva, Nirj Joseph
Kennedy, Charles (Ross,C&S)


Dickens, Geoffrey
Key, Robert


Dorrell, Stephen
Kilfedder, Sir James


Douglas-Hamilton, Lord James
King, Rt Hon Tom


Dover, Den
Kirkwood, Archy


Duncan, Alan
Knight, Mrs Angela (Erewash)


Dunn, Bob
Knight, Greg (Derby N)


Durant, Sir Anthony
Knight, Dame Jill (Bir'm E'st'n)


Eggar, Tim
Knox, David


Elletson, Harold
Kynoch, George (Kincardine)


Emery, Rt Hon Sir Peter
Lait, Mrs Jacqui


Evans, David (Welwyn Hatfield)
Lamont, Rt Hon Norman


Evans, Jonathan (Brecon)
Lennox-Boyd, Mark


Evans, Nigel (Ribble Valley)
Lester, Jim (Broxtowe)


Evans, Roger (Monmouth)
Lidington, David


Evennett, David
Lightbown, David


Faber, David
Lilley, Rt Hon Peter


Fabricant, Michael
Lloyd, Peter (Fareham)


Fairbairn, Sir Nicholas
Llwyd, Elfyn


Fenner, Dame Peggy
Luff, Peter


Field, Barry (Isle of Wight)
Lynne, Ms Liz


Fishburn, Dudley
MacGregor, Rt Hon John


Forsyth, Michael (Stirling)
MacKay, Andrew


Forth, Eric
Maclean, David


Foster, Don (Bath)
Maclennan, Robert


Fowler, Rt Hon Sir Norman
McLoughlin, Patrick


Fox, Dr Liam (Woodspring)
Madel, David


Fox, Sir Marcus (Shipley)
Maitland, Lady Olga


Freeman, Roger
Malone, Gerald


French, Douglas
Mans, Keith


Gale, Roger
Marland, Paul


Gallie, Phil
Marshall, John (Hendon S)


Garel-Jones, Rt Hon Tristan
Marshall, Sir Michael (Arundel)


Garnier, Edward
Martin, David (Portsmouth S)


Gillan, Cheryl
Mates, Michael


Goodson-Wickes, Dr Charles
Mawhinney, Dr Brian


Gorst, John
Mayhew, Rt Hon Sir Patrick


Grant, Sir Anthony (Cambs SW)
Mellor, Rt Hon David


Greenway, Harry (Ealing N)
Merchant, Piers


Greenway, John (Ryedale)
Milligan, Stephen


Griffiths, Peter (Portsmouth, N)
Mills, Iain


Grylls, Sir Michael
Mitchell, Andrew (Gedling)


Gummer, Rt Hon John Selwyn
Monro, Sir Hector


Hague, William
Montgomery, Sir Fergus


Hamilton, Rt Hon Archie (Epsom)
Moss, Malcolm


Hamilton, Neil (Tatton)
Needham, Richard


Hampson, Dr Keith
Nelson, Anthony


Hanley, Jeremy
Neubert, Sir Michael


Hannam, Sir John
Newton, Rt Hon Tony


Hargreaves, Andrew
Nicholls, Patrick


Harris, David
Nicholson, David (Taunton)


Haselhurst, Alan
Nicholson, Emma (Devon West)


Hawkins, Nick
Norris, Steve


Hayes, Jerry
Onslow, Rt Hon Sir Cranley


Heald, Oliver
Oppenheim, Phillip


Heath, Rt Hon Sir Edward
Ottaway, Richard


Heathcoat-Amory, David
Page, Richard


Hendry, Charles
Paice, James


Heseltine, Rt Hon Michael
Patnick, Irvine


Hicks, Robert
Patten, Rt Hon John


Higgins, Rt Hon Sir Terence L.
Pattie, Rt Hon Sir Geoffrey


Hill, James (Southampton Test)
Pawsey, James


Hogg, Rt Hon Douglas (G'tham)
Peacock, Mrs Elizabeth


Horam, John
Pickles, Eric


Hordern, Rt Hon Sir Peter
Porter, Barry (Wirral S)


Howard, Rt Hon Michael
Portillo, Rt Hon Michael


Howarth, Alan (Strat'rd-on-A)
Powell, William (Corby)


Howell, Rt Hon David (G'dford)
Rathbone, Tim


Hunt, Rt Hon David (Wirral W)
Redwood, John





Richards, Rod
Thomason, Roy


Riddick, Graham
Thompson, Sir Donald (C'er V)


Rifkind, Rt Hon. Malcolm
Thompson, Patrick (Norwich N)


Roberts, Rt Hon Sir Wyn
Thornton, Sir Malcolm


Robertson, Raymond (Ab'd'n S)
Thurnham, Peter


Robinson, Mark (Somerton)
Townsend, Cyril D. (Bexl'yh'th)


Rowe, Andrew (Mid Kent)
Tracey, Richard


Rumbold, Rt Hon Dame Angela
Tredinnick, David


Ryder, Rt Hon Richard
Trotter, Neville


Sackville, Tom
Twinn, Dr Ian


Sainsbury, Rt Hon Tim
Tyler, Paul


Scott, Rt Hon Nicholas
Vaughan, Sir Gerard


Shaw, David (Dover)
Viggers, Peter


Shaw, Sir Giles (Pudsey)
Waldegrave, Rt Hon William


Shephard, Rt Hon Gillian
Walden, George


Shepherd, Colin (Hereford)
Waller, Gary


Shersby, Michael
Ward, John


Smith, Tim (Beaconsfield)
Wardle, Charles (Bexhill)


Soames, Nicholas
Waterson, Nigel


Spencer, Sir Derek
Wells, Bowen


Spicer, Sir James (W Dorset)
Wheeler, Rt Hon Sir John


Spink, Dr Robert
Whitney, Ray


Spring, Richard
Whittingdale, John


Sproat, Iain
Widdecombe, Ann


Squire, Robin (Hornchurch)
Wiggin, Sir Jerry


Stanley, Rt Hon Sir John
Wigley, Dafydd


Steen, Anthony
Willetts, David


Stephen, Michael
Wolfson, Mark


Stern, Michael
Wood, Timothy


Stewart, Allan
Yeo, Tim


Streeter, Gary
Young, Sir George (Acton)


Sumberg, David



Sykes, John
Tellers for the Ayes:


Taylor, John M. (Solihull)
Mr. Timothy Kirkhope and


Taylor, Matthew (Truro)
Mr. Robert Hughes.


Temple-Morris, Peter



NOES


Abbott, Ms Diane
Connarty, Michael


Adams, Mrs Irene
Cook, Frank (Stockton N)


Ainger, Nick
Corbett, Robin


Ainsworth, Robert (Cov'try NE)
Corston, Ms Jean


Anderson, Donald (Swansea E)
Cryer, Bob


Anderson, Ms Janet (Ros'dale)
Cummings, John


Ashton, Joe
Cunliffe, Lawrence


Barnes, Harry
Cunningham, Jim (Covy SE)


Barron, Kevin
Darling, Alistair


Battle, John
Davidson, Ian


Bayley, Hugh
Davies, Bryan (Oldham C'tral)


Beckett, Rt Hon Margaret
Davies, Rt Hon Denzil (Llanelli)


Bell, Stuart
Davis, Terry (B'ham, H'dge H'l)


Benn, Rt Hon Tony
Denham, John


Bennett, Andrew F.
Dewar, Donald


Bermingham, Gerald
Dixon, Don


Betts, Clive
Dobson, Frank


Boateng, Paul
Donohoe, Brian H.


Body, Sir Richard
Dowd, Jim


Boyce, Jimmy
Dunwoody, Mrs Gwyneth


Boyes, Roland
Eagle, Ms Angela


Bradley, Keith
Eastham, Ken


Bray, Dr Jeremy
Enright, Derek


Brown, N. (N'c'tle upon Tyne E)
Etherington, Bill


Budgen, Nicholas
Field, Frank (Birkenhead)


Burden, Richard
Flynn, Paul


Byers, Stephen
Foster, Rt Hon Derek


Caborn, Richard
Fraser, John


Callaghan, Jim
Fyfe, Maria


Campbell, Mrs Anne (C'bridge)
Galbraith, Sam


Campbell-Savours, D. N.
Gapes, Mike


Canavan, Dennis
Garrett, John


Cann, Jamie
George, Bruce


Carlisle, John (Luton North)
Gerrard, Neil


Carttiss, Michael
Gill, Christopher


Cash, William
Godman, Dr Norman A.


Chisholm, Malcolm
Godsiff, Roger


Clapham, Michael
Golding, Mrs Llin


Clarke, Eric (Midlothian)
Gordon, Mildred


Clelland, David
Gorman, Mrs Teresa


Clwyd, Mrs Ann
Grant, Bernie (Tottenham)


Cohen, Harry
Griffiths, Nigel (Edinburgh S)






Griffiths, Win (Bridgend)
Mudie, George


Grocott, Bruce
Mullin, Chris


Gunnell, John
Murphy, Paul


Hain, Peter
Oakes, Rt Hon Gordon


Hall, Mike
O'Brien, William (Normanton)


Hanson, David
O'Hara, Edward


Heppell, John
Olner, William


Hinchliffe, David
Pendry, Tom


Hogg, Norman (Cumbernauld)
Pickthall, Colin


Home Robertson, John
Pike, Peter L.


Hood, Jimmy
Pope, Greg


Hoon, Geoffrey
Powell, Ray (Ogmore)


Howarth, George (Knowsley N)
Prentice, Ms Bridget (Lew'm E)


Howells, Dr. Kim (Pontypridd)
Prentice, Gordon (Pendle)


Hughes, Kevin (Doncaster N)
Prescott, John


Hughes, Roy (Newport E)
Primarolo, Dawn


Hutton, John
Quin, Ms Joyce


Illsley, Eric
Randall, Stuart


Ingram, Adam
Rogers, Allan


Jackson, Glenda (H'stead)
Ross, Ernie (Dundee W)


Jackson, Helen (Shef'ld, H)
Ross, William (E Londonderry)


Jessel, Toby
Rowlands, Ted


Jones, Barry (Alyn and D'side)
Ruddock, Joan


Jones, Lynne (B'ham S O)
Sheldon, Rt Hon Robert


Kaufman, Rt Hon Gerald
Shepherd, Richard (Aldridge)


Keen, Alan
Shore, Rt Hon Peter


Kennedy, Jane (Lpool Brdgn)
Short, Clare


Khabra, Piara S.
Skeet, Sir Trevor


Kilfoyle, Peter
Skinner, Dennis


Knapman, Roger
Smith, Andrew (Oxford E)


Lawrence, Sir Ivan
Smith, Llew (Blaenau Gwent)


Leighton, Ron
Spearing, Nigel


Litherland, Robert
Stott, Roger


Livingstone, Ken
Taylor, Mrs Ann (Dewsbury)


Lloyd, Tony (Stretford)
Trimble, David


Lord, Michael
Turner, Dennis


Loyden, Eddie
Vaz, Keith


McAllion, John
Walker, A. Cecil (Belfast N)


McAvoy, Thomas
Walker, Bill (N Tayside)


McCartney, Ian
Walker, Rt Hon Sir Harold


Macdonald, Calum
Walley, Joan


McKelvey, William
Wardell, Gareth (Gower)


Mackinlay, Andrew
Wareing, Robert N


McLeish, Henry
Watson, Mike


McMaster, Gordon
Wicks, Malcolm


Madden, Max
Wilkinson, John


Maginnis, Ken
Williams, Rt Hon Alan (Sw'n W)


Mandelson, Peter
Winnick, David


Marek, Dr John
Winterton, Mrs Ann (Congleton)


Marshall, David (Shettleston)
Winterton, Nicholas (Macc'f'ld)


Marshall, Jim (Leicester, S)
Worthington, Tony


Martin, Michael J. (Springburn)
Wray, Jimmy


Michie, Bill (Sheffield Heeley)
Wright, Dr Tony


Milburn, Alan



Miller, Andrew
Tellers for the Noes:


Molyneaux, Rt Hon James
Mr. Jon Owen Jones and


Morley, Elliot
Mr. Alan Meale.


Morris, Estelle (B'ham Yardley)

Question accordingly agreed to.

Question put accordingly, That the amendment be made:

The Committee divided: Ayes 80, Noes 275.

Division No. 213]
[9 pm


AYES


Abbott, Ms Diane
Carlisle, John (Luton North)


Adams, Mrs Irene
Carttiss, Michael


Ashton, Joe
Cash, William


Barnes, Harry
Chisholm, Malcolm


Benn, Rt Hon Tony
Clapham, Michael


Bermingham, Gerald
Cohen, Harry


Biffen, Rt Hon John
Connarty, Michael


Body, Sir Richard
Corston, Ms Jean


Boyce, Jimmy
Cryer, Bob


Budgen, Nicholas
Cummings, John


Burden, Richard
Cunliffe, Lawrence


Callaghan, Jim
Davidson, Ian


Canavan, Dennis
Davies, Rt Hon Denzil (Llanelli)





Davis, Terry (B'ham, H'dge H'l)
Martin, Michael J. (Springburn)


Dunwoody, Mrs Gwyneth
Michie, Bill (Sheffield Heeley)


Etherington, Bill
Molyneaux, Rt Hon James


George, Bruce
Olner, William


Gerrard, Neil
Parry, Robert


Gill, Christopher
Ross, William (E Londonderry)


Godman, Dr Norman A.
Sheldon, Rt Hon Robert


Godsiff, Roger
Shepherd, Richard (Aldridge)


Gorman, Mrs Teresa
Shore, Rt Hon Peter


Grant, Bernie (Tottenham)
Skeet, Sir Trevor


Hood, Jimmy
Skinner, Dennis


Howarth, George (Knowsley N)
Smith, Llew (Blaenau Gwent)


Hughes, Roy (Newport E)
Spearing, Nigel


Jessel, Toby
Tapsell, Sir Peter


Jones, Lynne (B'ham S O)
Trimble, David


Kennedy, Jane (Lpool Brdgn)
Walker, A. Cecil (Belfast N)


Knapman, Roger
Walker, Bill (N Tayside)


Lawrence, Sir Ivan
Watson, Mike


Leighton, Ron
Wilkinson, John


Livingstone, Ken
Williams, Rt Hon Alan (Sw'n W)


Lord, Michael
Winnick, David


Loyden, Eddie
Winterton, Mrs Ann (Congleton)


McAllion, John
Winterton, Nicholas (Macc'f'ld)


McAvoy, Thomas
Wray, Jimmy


McKelvey, William
Wright, Dr Tony


Madden, Max



Maginnis, Ken
Tellers for the Ayes:


Marshall, David (Shettleston)
Mr. Alan F. Bennett and


Marshall, Jim (Leicester, S)
Mr. Ted Rowlands.


NOES


Adley, Robert
Congdon, David


Ainsworth, Peter (East Surrey)
Conway, Derek


Aitken, Jonathan
Coombs, Anthony (Wyre For'st)


Alexander, Richard
Coombs, Simon (Swindon)


Alton, David
Cope, Rt Hon Sir John


Amess, David
Cormack, Patrick


Ancram, Michael
Couchman, James


Arbuthnot, James
Curry, David (Skipton & Ripon)


Arnold, Jacques (Gravesham)
Dafis, Cynog


Arnold, Sir Thomas (Hazel Grv)
Davis, David (Boothferry)


Ashby, David
Day, Stephen


Ashdown, Rt Hon Paddy
Dickens, Geoffrey


Atkinson, Peter (Hexham)
Dorrell, Stephen


Baker, Nicholas (Dorset North)
Douglas-Hamilton, Lord James


Baldry, Tony
Dover, Den


Banks, Matthew (Southport)
Duncan, Alan


Banks, Robert (Harrogate)
Dunn, Bob


Bates, Michael
Durant, Sir Anthony


Batiste, Spencer
Eggar, Tim


Bellingham, Henry
Elletson, Harold


Beresford, Sir Paul
Emery, Rt Hon Sir Peter


Blackburn, Dr John G.
Enright, Derek


Booth, Hartley
Evans, David (Welwyn Hatfield)


Boswell, Tim
Evans, Jonathan (Brecon)


Bottomley, Peter (Eltham)
Evans, Nigel (Ribble Valley)


Bottomley, Rt Hon Virginia
Evans, Roger (Monmouth)


Bowden, Andrew
Evennett, David


Bowis, John
Faber, David


Brandreth, Gyles
Fabricant, Michael


Brazier, Julian
Fairbairn, Sir Nicholas


Bright, Graham
Fenner, Dame Peggy


Brooke, Rt Hon Peter
Field, Barry (Isle of Wight)


Brown, M. (Brigg & Cl'thorpes)
Fishburn, Dudley


Browning, Mrs. Angela
Forsyth, Michael (Stirling)


Bruce, Ian (S Dorset)
Forth, Eric


Bruce, Malcolm (Gordon)
Foster, Don (Bath)


Burns, Simon
Fowler, Rt Hon Sir Norman


Burt, Alistair
Fox, Dr Liam (Woodspring)


Butterfill, John
Fox, Sir Marcus (Shipley)


Campbell, Menzies (Fife NE)
Freeman, Roger


Carlile, Alexander (Montgomry)
French, Douglas


Carlisle, Kenneth (Lincoln)
Gale, Roger


Carrington, Matthew
Gallie, Phil


Channon, Rt Hon Paul
Garel-Jones, Rt Hon Tristan


Churchill, Mr
Garnier, Edward


Clarke, Rt Hon Kenneth (Ruclif)
Gillan, Cheryl


Clifton-Brown, Geoffrey
Goodson-Wickes, Dr Charles


Coe, Sebastian
Gorst, John


Colvin, Michael
Grant, Sir Anthony (Cambs SW)






Greenway, Harry (Ealing N)
Mellor, Rt Hon David


Greenway, John (Ryedale)
Merchant, Piers


Grylls, Sir Michael
Milligan, Stephen


Gummer, Rt Hon John Selwyn
Mills, Iain


Hague, William
Mitchell, Andrew (Gedling)


Hamilton, Rt Hon Archie (Epsom)
Monro, Sir Hector


Hamilton, Neil (Tatton)
Montgomery, Sir Fergus


Hampson, Dr Keith
Moss, Malcolm


Hanley, Jeremy
Needham, Richard


Hannam, Sir John
Nelson, Anthony


Hargreaves, Andrew
Neubert, Sir Michael


Harris, David
Newton, Rt Hon Tony


Haselhurst, Alan
Nicholls, Patrick


Hawkins, Nick
Nicholson, David (Taunton)


Hayes, Jerry
Nicholson, Emma (Devon West)


Heald, Oliver
Norris, Steve


Heath, Rt Hon Sir Edward
Onslow, Rt Hon Sir Cranley


Heathcoat-Amory, David
Oppenheim, Phillip


Hendry, Charles
Ottaway, Richard


Heseltine, Rt Hon Michael
Page, Richard


Hicks, Robert
Paice, James


Higgins, Rt Hon Sir Terence L.
Patnick, Irvine


Hill, James (Southampton Test)
Patten, Rt Hon John


Hogg, Rt Hon Douglas (G'tham)
Pattie, Rt Hon Sir Geoffrey


Horam, John
Peacock, Mrs Elizabeth


Hordern, Rt Hon Sir Peter
Pickles, Eric


Howard, Rt Hon Michael
Porter, Barry (Wirral S)


Howarth, Alan (Strat'rd-on-A)
Portillo, Rt Hon Michael


Howell, Rt Hon David (G'dford)
Powell, William (Corby)


Hughes Robert G. (Harrow W)
Rathbone, Tim


Hunt, Rt Hon David (Wirral W)
Redwood, John


Hunt, Sir John (Ravensbourne)
Richards, Rod


Jack, Michael
Riddick, Graham


Jackson, Robert (Wantage)
Rifkind, Rt Hon. Malcolm


Johnson Smith, Sir Geoffrey
Roberts, Rt Hon Sir Wyn


Johnston, Sir Russell
Robertson, Raymond (Ab'd'n S)


Jones, Gwilym (Cardiff N)
Robinson, Mark (Somerton)


Jones, Ieuan Wyn (Ynys Môn)
Rowe, Andrew (Mid Kent)


Jones, Nigel (Cheltenham)
Rumbold, Rt Hon Dame Angela


Jopling, Rt Hon Michael
Ryder, Rt Hon Richard


Kellett-Bowman, Dame Elaine
Sackville, Tom


Kennedy, Charles (Ross,C&S)
Sainsbury, Rt Hon Tim


Key, Robert
Scott, Rt Hon Nicholas


Kilfedder, Sir James
Shaw, David (Dover)


King, Rt Hon Tom
Shaw, Sir Giles (Pudsey)


Kirkhope, Timothy
Shephard, Rt Hon Gillian


Kirkwood, Archy
Shepherd, Colin (Hereford)


Knight, Mrs Angela (Erewash)
Shersby, Michael


Knight, Greg (Derby N)
Smith, Tim (Beaconsfield)


Knight, Dame Jill (Bir'm E'st'n)
Soames, Nicholas


Knox, David
Spencer, Sir Derek


Kynoch, George (Kincardine)
Spicer, Sir James (W Dorset)


Lait, Mrs Jacqui
Spink, Dr Robert


Lamont, Rt Hon Norman
Spring, Richard


Lennox-Boyd, Mark
Sproat, Iain


Lester, Jim (Broxtowe)
Squire, Robin (Hornchurch)


Lidington, David
Stanley, Rt Hon Sir John


Lilley, Rt Hon Peter
Steen, Anthony


Lloyd, Peter (Fareham)
Stephen, Michael


Llwyd, Elfyn
Stern, Michael


Luff, Peter
Stewart, Allan


Lyell, Rt Hon Sir Nicholas
Streeter, Gary


Lynne, Ms Liz
Sumberg, David


Macdonald, Calum
Sykes, John


MacGregor, Rt Hon John
Taylor, John M. (Solihull)


MacKay, Andrew
Taylor, Matthew (Truro)


Maclean, David
Temple-Morris, Peter


Maclennan, Robert
Thomason, Roy


McLoughlin, Patrick
Thompson, Sir Donald (C'er V)


Madel, David
Thompson, Patrick (Norwich N)


Maitland, Lady Olga
Thornton, Sir Malcolm


Malone, Gerald
Thurnham, Peter


Mans, Keith
Townsend, Cyril D. (Bexl'yh'th)


Marland, Paul
Tracey, Richard


Marshall, John (Hendon S)
Tredinnick, David


Marshall, Sir Michael (Arundel)
Trotter, Neville


Martin, David (Portsmouth S)
Twinn, Dr Ian


Mates, Michael
Tyler, Paul


Mawhinney, Dr Brian
Vaughan, Sir Gerard


Mayhew, Rt Hon Sir Patrick
Viggers, Peter





Waldegrave, Rt Hon William
Wigley, Dafydd


Walden, George
Willetts, David


Waller, Gary
Wolfson, Mark


Ward, John
Wood, Timothy


Wardle, Charles (Bexhill)
Yeo, Tim


Waterson, Nigel
Young, Sir George (Acton)


Wells, Bowen



Wheeler, Rt Hon Sir John
Tellers for the Noes:


Whitney, Ray
Mr. Sydney Chapman and


Widdecombe, Ann
Mr. David Lightbown.


Wiggin, Sir Jerry

Question accordingly negatived.

The Chairman: We now move to the group on foreign and security and amendment No. 227. Mr. William Cash? Mr. Spicer? Mr. Gill? Mr. Cran? Mr. Shepherd? [Interruption.] Mr. Shepherd.

Mr. Rogers: On a point of order, Mr. Morris. Before you called Mr. Shepherd, I had moved the amendment formally.

The Chairman: The hon. Gentleman did not.

Mr. Rogers: Yes, I did. I stood and moved it formally.

The Chairman: I am afraid that the hon. Member cannot do that. It is not the procedure. I have to go through the list of people who are attached to the amendment. Mr. Shepherd has the floor to move the amendment.

Mr. Richard Shepherd: Then I move it formally as well.
Amendment proposed: No. 227, in page 1, line 9, after 'II', insert 'except Article 238'.—[Mr. Richard Shepherd.]

The Chairman: With this, it will be convenient also to discuss the following: Amendment No. 231, in page I, line 9, after 'II', insert 'except Article 228'.
Amendment No. 232, in page 1, line 9, after 'II', insert 'except Article 228a'.
Amendment No. 30, in page 1, line 9, leave out 'and IV' and insert 'IV and V.'.
Amendment (a) to amendment No. 30, in line 1, at end add
'(except Article J.2 of Title V)'.
Amendment (b) to amendment No. 30, in line 1, at end add
'(except Article J.4 of Title V)'.
Amendment (c) to amendment No. 30, in line 1, at end add
'but not Article J.1 in Title V thereof'.
Amendment (d) to amendment No. 30, in line 1, at end add
'but not Article J.3 in Title V thereof'.
Amendment (e) to amendment No. 30, in line 1, at end add
'but not Article J.5 in Title V thereof'.
Amendment (f) to amendment No. 30, in line 1, at end add
'but not Article J.6 in Title V thereof'.
Amendment (g) to amendment No. 30, in line 1, at end add
'but not Article J.7 in Title V thereof'.
Amendment (h) to amendment No. 30, in line 1, at end add
'but not Article J.8 in Title V thereof'.
Amendment (i) to amendment No. 30, in line 1, at end add
'but not Article J.9 in Title V thereof'.


Amendment (j) to amendment No. 30, in line 1, at end add
'but not Article J.10 in Title V thereof.
Amendment (k) to amendment No. 30, in line 1, at end add
'but not Article J.11 in Title V thereof'.
Amendment No. 224, in page 1, line 9, leave out 'and IV' and insert 'IV and V'.
New clause 5—Foreign, security and defence policy—
'The Secretary of State shall lay before Parliament a report of any case in which decisions taken, or proposed to be taken, by the Union in the course of implementing a common foreign, security and defence policy (pursuant to Article B in Title I of the Maastricht Treaty) are in his opinion inimical to the best interests of the United Kingdom.'.

Mr. David Howell: The amendments relate to the part of the Bill—and the relevant part of the treaty—concerning provisions on a common foreign and security policy. Article J of the treaty states:
A common foreign and security policy is hereby established which shall be governed by the following provisions.
The provisions follow.
This is supposed to be the part of the treaty, and the part of the Bill relevant to the treaty, in which the full machinery of the Community—and the machinery of the Commission—are to be kept at bay. We are presented here with one of the pillar elements of the treaty, which will be governed by intergovernmental co-operation rather than by the machinery of the Community. We should first examine the degree to which the Community machinery will indeed be kept out of the creation of a common foreign and security policy.

Dr. Godman: I thank the right hon. Gentleman for giving way with his characteristic courtesy. Will he confirm that states making formal application for membership of what will be the European union must accept common security and defence policy as it stands?

Mr. Howell: "Confirm" is too strong a word, but I understand that will be the case, although states may seek certain derogations in the negotiations leading to their membership. Broadly speaking, the hon. Gentleman is right: they will be embraced in this part of the union, and will be covered by the pillar of intergovernmental operations that is supposed to deliver a common foreign policy.

Mr. John Wilkinson: At the Edinburgh summit, did not the Danes explicitly secure a derogation on defence? Denmark is not a member of the Western European Union, and it does not want the defence obligations contained in the treaty.

Mr. Howell: What Denmark did and not get at the Edinburgh summit is a very interesting, almost surreal subject. The decisions about derogation for Denmark were not made by the Community; they were decided by the individuals who happened to be present as members of the European Council of Ministers, but not in their capacity as Community members. Oddly enough, however, the decision—which was not a Community decision—that Denmark should have those derogations was then recorded in the minutes of Community affairs.
The set of derogations for Denmark has an almost Hamlet-like, almost ghostlike, quality. No one is quite sure

what the Danes have or have not secured for themselves, apart from feeling that they are in some way not bound by these matters.

Mr. Nigel Spearing: rose—

Mr. Rowlands: rose—

Mr. Howell: I want to proceed with my speech. I have already given way twice in two minutes.
First, I want to examine the extent to which we shall see a separation between the activities of the Community machinery—particularly the activities of the Commission—and the activities of the Council of Ministers, acting in its intergovernmental role of dealing with foreign affairs. That requires examination, because the Commission has competences in external affairs. Those external affairs are meant to be of a commercial and economic nature, and indeed they are; but a large proportion of all foreign policy issues are intimately, inextricably linked with commerce and external financial matters. We must ask to what extent it will be possible, in practice, for a separation to be maintained between the foreign policy issues that do not impinge on the competence of the Commission and the Community, and the foreign policy issues that are inextricably woven together in both economic and non-economic matters.
It will be difficult, first, because, as I have said, up to 80 per cent. of all foreign-policy issues touch on commercial, economic and financial matters. Secondly, as the treaty makes clear, the Commission will have a seat on the Council of Ministers. It will have certain rights to initiate ideas and proposals in the Council on issues of foreign policy. I hope that we can ensure that, as the treaty develops and emerges, that does not lead to a gradual erosion of the pillar that we are discussing until it becomes a mere needle and eventually evaporates altogether, so that foreign policy and common security policy, in practice, become the bailiwick of the Community machinery.
That would be a pity, and it would go flatly against what some of us want to see, which is that the pillar elements in the treaty—the intergovernmental elements—far from being eroded and weakened, need to be strengthened so as to foster what my right hon. Friend the Foreign Secretary calls an alternative model for European development. If we are to develop that, it is a strengthening of the pillars, rather than a weakening and erosion, that we need to see.
Another difficulty is that the treaty insists in its early articles, long since debated, that there should be one institutional framework in which all activities, whether the intergovernmental pillar ones that we are discussing or the many issues that have already been discussed at great length in Committee, should be contained. That is a concept that we shall need to challenge as we begin to reform and revise the treaty in the period leading up to 1996, when I hope that there will be a major contribution, not least by Government and the United Kingdom, to a new constitution for Europe that will be rather different from the one that we shall find immediately after the completion of the Maastricht process.
If we are to see a common foreign policy handled in a sensible, pragmatic way, and not turned into a mish-mash and blur of the sort that I shall outline later, leading to serious foreign policy errors, it is important that in due course we should move away from a single institutional framework that embraces all the activities of European


nations, large and small, ancient and not so ancient—in other words, one massive structure or network. That would be a wrong starting point, and certainly a wrong finishing point. It is important for us to recognise that in future there can be different institutional frameworks to deal with different issues. Foreign policy and, I suspect, security and defence policies are different in their texture from some of the other issues that are embodied in the Rome treaty, the Single European Act and the Maastricht treaty.

Mr. Spearing: I think that the right hon. Gentleman has reached the kernel of an important issue. Has he noticed that in the title that he is discussing there are at least 20 references to the Council, and we know that the Council will be the pivot of a single foreign and security policy? The right hon. Gentleman is the Chairman of the Select Committee on Foreign Affairs, who will be much involved in the matters that we are discussing. That being so, I am glad that he is contributing to the debate. Has the right hon. Gentleman questioned any Minister on how the separation between intergovernmental and other issues will be dealt with in the general council of the Council, which is sometimes called the Foreign Council, by a single organisation in the Council, and a single organisation under COREPER? Surely that is the unity that he has said that he fears.

Mr. Howell: The answer is yes. The Select Committee on Foreign Affairs has so questioned Ministers, and it hopes in due course to report to the House of Commons on its conclusions. Perhaps I should not go into too much detail about the conclusions we draw, but the evidence that has emerged suggests that it is very difficult to draw a permanent, hard and fast line between these two vast areas of foreign policy; and that the dangers of blurring and coincidence are considerable. We shall have to think of ways—they are not embodied in this treaty—of ensuring the continuation of the intergovernmental process by which we set great store and which is said to give this treaty a different flavour from previous European treaties. That process must be preserved and strengthened.
Secondly, not only do we want to avoid a single institutional framework but we note—perhaps we need to reinforce—the absence of any great convergence of foreign policy interests between the different powers and member states of the Community. We must be very careful not to try to impose a false convergence of foreign policy outlook on the interests of member states. If we do impose one, it will lead to unfortunate results and we will be pushing against reality, which is going the other way.
The truth is that, just as the economies of the member countries are not, alas, converging—in many ways they are diverging—so the politics and foreign policy concerns of the Community countries, although they overlap and there are areas of common interest that make a good case for working closely together in intergovernmental cooperation, are also growing apart. Changes of emphasis and contrasts of emphasis in foreign policy are becoming sharper as we move into the 1990s than they were in the 1980s. One has only to take a brief Cook's tour of continental Europe to see how these divergencies are growing. Unless we take them into account and understand them—as Keynes used to say, we must deal

with what is really happening, not with what the theory says should be happening—we do not have much hope of establishing an effective framework for our foreign common policy.
The Germans, for instance, have their own agenda: they are concerned with unification. They are also on the other side of the Community; they look eastwards, and, as they always have been, their concerns are with their relations with central and eastern Europe—and with the great turmoil which is Russia today. That is their primary concern. Many Germans think of nothing else and are not interested in other dimensions of foreign policy. We must not criticise them for that.
I am not sure what the French agenda is. The French are going through a political earthquake, and what France's foreign policy priorities will be after it I am not sure. The concern in many French circles, however, is partly with eastern Europe—our concern, too—but much more with the Maghreb. The French look across the Mediterranean to the great nations of Algeria and Morocco, bound up as they are with French history and emotions. The primary fear of the Quai D'Orsay is about the problem of what will happen in these countries. Will there be a growth of vicious fundamentalism along the north African coast, ousting the moderate regimes that are trying to come to terms with the modern world?

Mr. Winnick: Was not there a good illustration of the failure of the member states of the European Community to reach a common foreign policy when we were faced with criminal aggression in 1990 in the form of the Iraqi invasion of Kuwait? The need then, as the right hon. Gentleman realised at the time, was to take up arms to end the criminal aggression. If we had waited for a common foreign policy to emerge, Kuwait would probably still be occupied by Iraq, unless, of course, the United States had acted alone.

Mr. Howell: The hon. Gentleman has made a very good point, and other examples could be cited. There is no doubt that, in the particular case to which the hon. Gentleman referred, great forces were at work in the world which drew the allies together in a coalition that was subsequently blessed by the United Nations. It was not actually a UN force. The idea of a common European policy was secondary and almost invisible.

The Minister of State, Foreign and Commonwealth Office (Mr. Tristan Garel-Jones): Does my right hon. Friend agree that, during the events to which the hon. Member for Walsall, North (Mr. Winnick) referred, there was a consistent foreign policy on the part of EC countries through European political co-operation? However, there was no co-ordinated defence response from our European partners. That is one reason why the United Kingdom Government have taken the initiative in seeking to begin to develop, through the Western European Union, a defence dimension for Europe compatible with NATO. However, the political response during the crisis was there.

Mr. Howell: That is partly true, but if my right hon. Friend the Minister recalls the hectic days before the final decision to send troops into Kuwait, he will remember that there were a number of rather dramatic wobbles in the French approach to the matter, quite aside from the views from Bonn and Rome. In the end, a common foreign


policy view may have emerged, but it was sadly something following the event rather than at the cutting edge of the event.
Before the intervention by the hon. Member for Walsall, North (Mr. Winnick), I was touring the Europe of today trying to illustrate the dangers of stamping too tight a mould on the concept of common foreign policy which, I do not dispute, is useful in certain circumstances. However, if it were a general demand for uniformity, that would be gravely mistaken.
I have already referred to Germany and France. Italy is also a puzzle today. There are those, including senior statesmen in Italy, who question whether Italy will even exist as a state in a few years. It is certainly in a difficult position in respect of formulating and pursuing clear foreign policy. The previous Italian Government had a sort of agenda, particularly in respect of the Balkans. However, that is hardly a sound basis for a co-ordinated foreign policy.
Similarly, I am uncertain about the perspectives and priorities of Spain. It seems that the Spanish socialist Government are approaching the end of their time. A new Government will emerge who will probably remain very committed to the European Community, although the high promises on the economic side are clearly not being met. There is considerable disappointment about that. I really would not like to comment on current Spanish policy priorities, but I do not feel any particular closeness between what the Spanish are saying and what we are saying and identifying as our priorities.
Even poor little Belgium, which seemed to be the acme of the common approach whether in monetary affairs, economic competences or foreign policy, now seems to be quivering on the bough. It faces considerable difficulties on the economic side and in respect of foreign and internal domestic policies.
We have our own foreign policy priorities, part of which relate to the European context. In respect of many of those priorities, we want to work closely with our continental neighbours, not least in establishing a common line in respect of what we can do—if anything can be done at all—about the chaos in Russia or whether we will see that vast federation splinter into 20 countries in the same way that the Soviet Union splintered.
We have a very different perspective at the western end of Europe from that of the Germans and perhaps of almost all our continental neighbours. I have one example that I should like to draw to the attention of the Committee. We have a connection with, experience of and involvement in the Asian scene, particularly that of the south-east, as a result of chance, history and commerce of a kind that is not shared by any of the other Community countries. There is no doubt that events are now shaping in Asia in a hectic way as China begins to become the great economic power that it was always bound to become one day. The Chinese economic regions of Guangdong, Fukian, Hong Kong and Taiwan are beginning to trade with each other and generate capital flows across south-east Asia on a scale that makes our efforts in Europe look puny. It has almost reached the point where the inter-regional trade in south-east Asia is greater than ours in Europe.
I do not want to pursue the sensitive and difficult issue of Hong Kong, but, partly because of that and our traditional interests concerned with our commerce and our

involvement and attitude of mind to that region, we are extremely interested in that issue, and we have a great deal to offer.
I make no apology for grinding a favourite axe, but there is no doubt that we and the Japanese have an intimacy and an understanding that is probably unmatched throughout the Community. Fears are aroused in Europe about a Japanese trade invasion, but hopes are also expressed about Japanese investment—a curious ambiguity of sentiments.
There is no doubt that Britain has a particular role to play in interpreting Japan to the rest of the Community and the rest of the Community to Japan. I would be sad to see that unique role submerged or rolled into a common foreign policy of the Community. I accept that the Commission has competencies concerning external trade and negotiates with the Japanese, but it is important to consider security and foreign policies, which are of vast importance.
We will have to become increasingly concerned with the defence structure of Asia. We will have to consider the attitude of the Asians, particularly the Japanese, to Russia, of which they see a far more brutal side than our own. That is of crucial importance to us.

Mr. Mike Gapes: Is it not a fact that one of the problems of a relationship between the EC and Japan is its strong desire to become a permanent member of the United Nations Security Council? In the long term, our relationship will also be influenced by our relations, as Europeans, with Russia. The Japanese-Russian dispute over the northern islands, as the Japanese call them, is also important.
Surely it is absolutely impossible for us to have an important influence on the strategic debate within the EC unless we firmly endorse the processes towards the development of a common European policy on all aspects of security and international affairs.

Mr. Howell: I quibble only with the word "all" in the hon. Gentleman's intervention. Whether one can apply to all aspects the commonality, the commonisation—to conjure up a hideous word that is not in the dictionary—I rather doubt. The position of Japan vis-a-vis Russia is delicate and sensitive. The debate about its northern Islands is curious, especially when one considers how much territory the old Soviet Union conceded. It is hard for us to understand why the Russians want to hang on so grimly to such rather sad little islands. It is something, however, of great concern to Moscow and leads to extremely bad relations between that city and Tokyo.
Britain has a better understanding of some of the issues and how they might be resolved in a way to enable Japan to help Russia. If ever there was a natural matching, it must be between eastern Russia, a vast area of natural resources and commodities, and Japan, an island factory that uses them all up. That natural partnership does not exist at the moment because those countries detest each other. Perhaps we can help to overcome some of the problems.
Finally, I come to the saddest aspect of all of the attempts to put an over-zealous mould on the European foreign policies of EC members, and that is the Balkan fiasco. Here was an occasion when there appeared to be a European issue and the European nations said that not only was it a European issue, but that, in a sort of inverted


way, as the tail came to wag the dog, we must invent a common European foreign policy and demonstrate that there was such a thing in order to deal with the Balkan issue. As a result, some fatal steps were taken, the costs of which, the penalties of which, the blood from which, we see now flowing before us on the television screens almost nightly.
I refer in particular to the decision, taken in the name of a common European foreign policy, to recognise as independent sovereign states Croatia and Bosnia—certainly in the case of Bosnia, flatly against the advice and overriding the criteria laid down by Mr. Badinter of the conseil d'etat, who was authorised to judge and assess whether those countries fulfilled the criteria to be recognised as independent sovereign states. He came to the conclusion that they were not, but they were recognised because, we were told, it was a choice between the common sense, particularly strong here in London and a view particularly held by my right hon. Friend the Foreign Secretary, with his vast practical grasp of these things, that it was wrong, and the demand that it had to be, because if everyone did not go along with the Germans they would do it anyway and that would bust up the common European foreign policy. Therefore, we had the extraordinary situation where unity was put before sanity.

Mr. George Walden: My hon. Friend makes a valid point, but the situation is even worse than he expresses it, because there was a sort of unity of contradictions. Those who believed as a dogma in a common European foreign policy, and therefore wanted to demonstrate it in ex-Yugoslavia in the way that my right hon. Friend has described, were supported, paradoxically, by those who opposed, vehemently and dogmatically, a common European foreign policy and stressed much more the nationalism in Europe. Those people pressed strongly—I shall name no eminent names—without necessarily even knowing in some cases that there were Muslims in that part of the world, from an opposite side of the spectrum for the catastrophic recognition of parts of former Yugoslavia. Therefore, we had the terrible situation where two dogmas collided to produce the sort of catastrophe that my right hon. Friend has described.

Mr. Howell: My hon. Friend is right and the catastrophe has scarcely begun. There is no conceivable end in sight. We now see the heroic attempts—I do not want to denigrate them in any way—to try to create some order after each stage, as the situation gets more and more violent in the Balkans, being frustrated more and more frequently. We now have the realisation that the famous maps put forward by Lord Owen and Cyrus Vance are unacceptable and, according to, I think, the chief of the general staff in today's papers, unenforceable.
There never was a possibility of even an EC-UN solution being imposed on the Bosnian quagmire, the Bosnian "sponge" and the Bosnian tragedy. Some difficult lessons are yet to be learnt about that sad area before there is the slightest hope that the balance of terror will be so great that the bloodshed and the shooting will cease and it will be possible to police some action to halt the atrocious Serbian aggression in some areas and the atrocities of other groups of combatants in other areas. Basically there must be a recognition—and it will take much swallowing

—that the Serbians have won the war. The question is whether any of us, Europeans together or apart, with the Americans or with the Russians, have the political will to roll back the gains that the aggressors have made.

Mr. Patrick Cormack: Does it not give the most appalling signals of impotence that what has been recognised, rightly or wrongly, as an independent sovereign state is being subjugated by another sovereign state, with all the accompanying atrocities which are far worse than any since the second world war? United Nations soldiers, European soldiers and some British soldiers stand by—I make no criticism of them—while women and children are slaughtered in front of them. Is not that a damning indictment of our impotence?

Mr. Howell: It is a damning indictment of many things, including past mistakes, present impotence and failure to understand with our fingertips what is going on and what motivates people in that part of the world. We can either go on analysing the mistakes that have been made or we can say that we must try to do something constructive to halt the horrific problem that has been created.
We must ensure that both in the treaty and especially in the revision work that is to he done once the treaty is ratified we preserve and strengthen the pillars of intergovernmental co-operation. We put a question mark over the qualified majority voting. I was never in favour of that, although it is in the treaty. Even when joint action has been agreed, that system is a mistake. We must ensure that, when we build the European structure which will lie beyond Maastricht and which will have many qualities that are designed for a decentralised Europe, as my right hon. Friend the Foreign Secretary put in, we keep the pillars strong, pure and separate from erosion by ideas of imposing common foreign policy on all aspects of the diverse foreign interests of the different Community members, with the rich and encouraging differences that make up modern Europe.

Mr. Rogers: I thank the right hon. Gentleman who, I presume, is giving way. I hope that he will carry on and give us more of his expert advice. Does the right hon. Gentleman believe that structures should be set up on co-operation on these issues which are more elaborate than those proposed in the treaty and in the general context of the development of NATO?

Mr. Howell: I sensed that the Committee wanted to move on and I did not want to detain it for too long. My answer to the hon. Gentleman is no. More elaborate structures are not what we need. Clearer structures of intergovernmental co-operation can certainly be developed. We certainly need structures that have a more strongly entrenched element to prevent the constant trend towards centralisation. The language and vocabulary in the treaty beyond this treaty, which should be seen through but must be built on, should be less patronising and should recognise that power comes upwards from the people. We need such powers governing matters such as a common foreign policy, as well as the more centralised competences, rather than powers grandly devolved from the centre. We do not need elaborate structures.

Mr. Michael Lord: My right hon. Friend has given us a delightful explanation of the


situation as he sees it, and in his usual precise and gentle way, he has taken to pieces the proposals that we are debating. Does he believe that the right way forward is to ratify the treaty and hope to take things forward in the direction that he wants, or does he think that that is the wrong signal and that now is the time to say, "We don't like the way it is going. We think that much of it is wrong and this is the point where we should stop and look at it anew"?

Mr. Howell: My hon. Friend tempts me, but, no, I do not. Elsewhere, far outside the House, decisions may be taken and events will occur—perhaps in Copenhagen on 18 May or in some constitutional labyrinth in Germany, where there are difficulties with ratification of the treaty—which may stop this part of the Maastricht process. It would be utterly wrong for us actively to seek to halt the Maastricht process and its implications.
Why do I think that? Because I want to see a reshaping of Europe in ways that will be far more congenial to the British temperate and attitudes and to the new applicants—the EFTA countries, the new democracies of eastern Europe and, dare I say it, even to millions of people in France, Germany and Italy. I want Britain to be involved in that and to recognise that, after 10 or 20 years of having been told that we must trail after the train of superior neighbours who will rush ahead otherwise, it is now the other way round and that, through our rather cooler thinking and our insistence on the derogations that we sought in the original Maastricht treaty—not least in the creation of the pillar of foreign policy separate from the Community—we may be in a position, if we can get the confidence in ourselves, which we always seem to lack at the crucial moment, to lead and shape the Europe of the 1990s.

Mr. Rogers: I accept the right hon. Gentleman's advice that it would be wrong to set up elaborate structures. The right hon. Member for Bridgwater (Mr. King) is present; when he was Secretary of State for Defence, Britain took the lead in setting up a rapid reaction corps. The Franco-German brigade is being developed and I should be interested to hear the views of the right hon. Member for Guildford on the development of a European security force.

Mr. Howell: I do not think that these are beginnings. Practical bilateral and intergovernmental arrangements are being made between Community countries. People always underestimate, because there is little rhetoric attached to it, the closeness of French and British co-operation. We hear tremendous speeches about the Franco-German brigade, but the reality is that French and British senior soldiers and military personnel are co-operating in a most intimate and effective way. Such intergovernmental co-operation is good and welcome
The NATO structure has been, to put it rather brutally, looking for a new role and new mission in the post-cold war world. I think that it will find one because it is a highly efficient model of intergovernmental co-operation. It is almost a supranational model, but it is a very subtle arrangement that we should perhaps think of copying in other areas. That NATO model has at its heart something which is very important: it is a transatlantic structure. What it tells us, the message of a successful NATO that it blinks at us, is that it is not just Britain but America that needs to be at the heart of Europe if we are to establish an

effective European security structure to meet this extraordinary new world, in which we do not know where the next threat will come from.

Mr. Cash: My right hon. Friend has employed a seductive argument and put a great deal of emphasis on the separation of the pillars, but I am sure that he will agree that the Commission is associated with those activities. Furthermore, when one looks into the details a little more, one sees a problem. Under article J, the member states effectively subsume their security interests in a common position. It says:
The Member States shall support the Union's external and security policy actively and unreservedly in a spirit of loyalty and mutual solidarity. They shall refrain from any action which is contrary to the interests of the Union or likely to impair its effectiveness as a cohesive force in international relations. The Council shall ensure that these principles are complied with.
Does my right hon. Friend have any concern that, in going down that route, the wise words that he used about the value that can be placed on our pragmatism might be subsumed by the problem of our being locked into words that give too much emphasis to the union and to the Commission and effectively undermine the virtues of the policies that he has been advocating for so long?

Mr. Howell: That depends—this is where I differ from many of the things that my hon. Friend says—on the confidence with which one approaches those matters. He has described half the orange—the half that involves the Commission sitting round the table with the Council of Ministers. The Commission is apparently entitled to be another country and one with a considerable voice. There are dangers, as I began by saying, that the pillar dealing with certain foreign policy issues—not all—in a common way, an intergovernmental way, may be eroded, weakened and undermined by the sort of factors that my hon. Friend fears.
I say to my hon. Friend that he should not have too much fear. Let us go into the Europe of the next five years in a spirit of confidence that we can hold the line and indeed reverse some of the trends that we have seen rolling over us in the past 20 years. I believe that it can be done, but my hon. Friend does not.

Mr. Peter Mandelson: I found interesting, in the context of his speech, the right hon. Gentleman's remarks about NATO. I assume that he is aiming to conclude his speech by 10 o'clock. In the remaining three minutes, will he say something about the role of the Western European Union as an expression of the European Community's defence identity and whether it might have a peacekeeping role in tandem with the European Community's operations and interest in these matters?

Mr. Howell: The hon. Gentleman leads me to subjects beyond those on which I wanted to touch this evening. I do not want to keep the Committee any longer. As he knows, the problem with the WEU is that it is not an organisation in the sense that NATO is, and some of its members are not members of the Community, and some members of the Community are not members of the WEU. There would be real difficulties in trying to elevate that, as some of the Maastricht treaty architects wanted, into a European security force.
I hope that, when we have ratified Maastricht—I believe that we shall unless the Danes sink it—the


intergovernmental quality will be not merely defended but vigorously upheld and developed so as to give us a strong European foreign policy mechanism, which allows us to have our differences of view and pursue those differences without being submerged in a Euro-blur or a ludicrous foreign policy adventure of the kind that has brought only bloodshed and tragedy to the Balkans. I see that many of my hon. Friends wish to contribute to the debate, and I hope that they will have the opportunity to catch your eye, Mr. Morris.

Mr. Geoffrey Hoon: I am grateful, Mr. Morris, that once again you have given me the opportunity to interest the Committee rather late in the proceedings.
I congratulate the right hon. Member for Guildford (Mr. Howell) and hope to interest the Committee in the next 60 seconds as much as he did for the duration of his speech.
It now goes without saying that the main security problems for western Europe are no longer the military threat from the former Soviet Union or any of its successors, or indeed from the other former Warsaw pact countries. The problems now are the dangers arising from economic, political and ethnic instabilities.

It being Ten o'clock, THE CHAIRMAN left the Chair to report progress and ask leave to sit again.

Committee report progress; to sit again tomorrow.

Orders of the Day — Standard Spending Assessment (Cambridgeshire)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Nicholas Baker.]

10 pm

Mrs. Anne Campbell: I must confess that the standard spending assessment is not a subject which fascinates everyone. After a session in which many hon. Members were up all night, it is perhaps not surprising that so few of them remain in the Chamber for this debate. However, I am very pleased to see the hon. Member for Cambridgeshire, Sout-West (Sir A. Grant) in his seat, because, as one of my fellow Members for Cambridgeshire, he obviously shares my great interest in this matter. I am very grateful to him for turning up this evening.
There is a pattern in the Government's treatment of local authorities—a pattern, I am afraid, of failing to listen, undermining local democracy and removing accountability, and at the same time imposing spending cuts.
The standard spending assessments fit that pattern in all three respects. That is not just my view; it is the view of the Audit Commission which, in a leaked draft report, says that standard spending assessments and cappings leave councils with only cosmetic accountability for decisions largely made by Ministers.
That is not just Labour's and the Audit Commission's view. At a recent meeting of the Conservative-controlled Cambridgeshire county council, a resolution which referred to gross anomalies called for an urgent review of
such dubious measures as the Standard Spending Assessment and the Area Cost Adjustment.
That resolution, I am pleased to say, received all-party support.
That is all the more surprising when one knows that Cambridgeshire Conservative councillors quake at the knees at the mere thought of the tongue-lashing that they will receive from their former leader, the noble Lady Baroness Blatch for supporting publicly a resolution so critical of the Government. It is quite astonishing, and shows how strongly they feel. It is a situation in which anger conquers fear.
I can therefore say that I speak on behalf of the people of Cambridgeshire when I call on the Government to review the basis of the standard spending assessment and to give a fairer deal to Cambridgeshire.
If we look at some figures first to put the whole thing in context, we see that Cambridgeshire's SSA for 1993–94 is £380·6 million. The council budget has been set £2 million higher than this at the capping limit, and was negotiated because of the larger sums of money lost to further education than in the Government's formula calculations. This has meant an extra £10 on the council tax for a band B property across the county.
I also welcome the hon. Member for Cambridgeshire, South-East (Mr. Paice) who is now almost in his seat, and express my pleasure that he has chosen to attend this evening as well.
The education SSA for Cambridgeshire is £217·8 million, and the education budget is £226·75 million. That is £9 million higher, yet, even in that situation, Cambridgeshire is well down the list of all counties for spending per pupil. What are very sad and have angered


local people immensely over the past few months are the cuts in education which Cambridgeshire is having to impose.
We have recently seen £400,000 taken out of the community education budget. That has affected many people and particularly many pensioners, people who may not have many pleasures in life and get a great deal out of community education, including social contact and the opportunity to develop their skills and talents.
The county has also taken £340,000 from its post-16 transport, which means that pupils who previously had a free bus service to school are being charged £40 a term to get to college. That affects many of my constituent; who travel from the north side of Cambridge to the south side, to get to the sixth form college. It also affects much more drastically the constituents of the Conservative Members for Cambridgeshire, South-East and for Cambridgeshire, South-West. One could call it a tax on rural communities.
Also, £200,000 has been taken out of the discretionary further education awards budget; that also affects the opportunities of people in Cambridgeshire.
These, however, pale into insignificance when compared with the £1·3 million taken from the central education support services, even though Cambridgeshire is among the top 10 authorities for delegating resources to schools.
That is not all. Because of the increasing pupil numbers in secondary schools, they would have expected to receive an additional £900,000 this year, simply because of the way in which the local management of schools budget works, but that has not happened.
This is not a profligate, spendthrift, giveaway authority but a county that was so mean with its spending that the Conservatives lost control in 1985 when its leader was the noble Lady Baroness Blatch, now a Minister in the Department of Education. The Conservatives must be worried that they look set to lose control again in 1993 because the people of Cambridgeshire are fed up with penny-pinching and cuts. They want a quality service, investment in the future, in our children, in our excellent community education service; and they want the opportunity for students, particularly mature students, to win discretionary awards, so that they can gain the qualifications which they need and which the country needs.
The area cost adjustment is based on the new earnings survey, which is valid statistically at the economic planning regional level. Cambridgeshire comes into the East Anglian economic planning region, with Norfolk and Suffolk, and it gets no area cost adjustment, unlike Bedfordshire and Hertfordshire, which come into the south-east region.
The Library has supplied me with statistics looking at the standard spending assessments per pupil for five to 15-year-olds for 1993 to 1994. I see that the SSA per pupil for that age range in Cambridgeshire is £2,218. It is £115 more per pupil in Essex, £135 more per. pupil in Hertfordshire and £215 more in Bedfordshire. That money buys a great deal in terms of resources.
The area cost adjustment is unfair. First of all, it is based on insufficient information. The economic planning region statistics are being used to determine spending at county and district levels. In fact, if the funding of grant-maintained schools is based on future standard spending assessments, we shall see the economic planning region statistics being used to determine spending in

individual schools, and the situation will become even more ridiculous, and will give rise to even greater anomalies.
The area cost adjustment is unfair because it is based on insufficient, and insufficiently detailed, information. It is also based on the wrong information, because it assumes that, in expensive areas, staff are paid more to compensate for higher costs. In fact, a survey carried out by the Association of County Councils showed that there was very little variation in pay levels for teachers, police officers and fire fighters. These people are paid on national scales, so the whole basis of the area cost calculation is anomalous and inconsistent.
There is also in my area an inconsistency in the regional organisation of the Department of the Environment. It is a little curious that the Department's regional office covering Cambridge is in Bedford, yet, for the area cost adjustment, Bedfordshire and Cambridgeshire are in different economic planning regions. That does not seem to make sense.
When the SSA system replaced the grant-related expenditure assessments in 1990–91, the proportion of education control totals distributed for additional educational needs rose from 10 per cent. to 24 per cent.—a massive leap. Since then, the proportion has fallen a little, but it remains far higher than is justified. In fact, it is being used as a political fudge factor. A much higher proportion needs to be allocated for basic educational needs.
Finally, I believe that there is consensus that standard spending assessments are inequitable and that they are being abused—inequitable because they do not reflect the true costs of providing local services; abused because they are being used to impose on local authorities spending limits that should be decided by local people at local elections, and not by way of Government diktat.
The term "standard spending assessment" implies that the SSA takes account of the cost of providing a standard level of service in each local education authority area, but this is not true. In fact, each Department at Government level decides its control total, and then the SSA is simply used to divide this total between local authorities.
I am obviously fascinated to learn that the Secretary of State for the Environment is planning a review of the standard spending assessment system, including the area cost adjustment, in the coming year. I very much hope that that review will be more than window-dressing, that it will not be designed simply to fob local authorities off for another year. I hope that it will result in a fairer deal for the people of Cambridgeshire, but the precedents are not encouraging. I fear that the ugly pattern of imposing cuts and undermining democracy will continue. That is why I initiated this debate. I hope that the Minister will take on board the points that I have made.

Sir Anthony Grant: I am very grateful to the hon. Member for Cambridge (Ms Campbell) for allowing me a moment to participate in this important debate. She put her case with great care and a great deal of charm. In fact, so charming was she that I shall not say a word about the mismanagement of Cambridgeshire under a Lib-Lab coalition. I draw a veil right over that and confine myself to saying that Cambridgeshire county council, under Conservative


control, has displayed very good, efficient financial management. The hon. Lady described it as penny-pinching and tight-fisted.
However, the hon. Lady and I are in total agreement about the fact that the council has been unfairly treated for a very long time by the central Government over the question of the SSA. I can go back as far as 1983, when I had very serious complaints. With my noble Friend Lord Pym, I abstained. We were given an acknowledgement by the Minister—now the Chancellor of the Duchy of Lancaster—that Cambridgeshire had been unfairly treated, and were told that the Government would try to be fair in future. I have not seen much sign of fairness. We are still stuck with the wretched area cost adjustment, to which the hon. Lady rightly referred, which seriously militates against us.
My hon. Friends the Members for Cambridgeshire, South-East (Mr. Paice) and for Cambridgeshire, North-East (Mr. Moss) and I have nagged about this issue year after year. On 3 February this year, I raised the matter with the Secretary of State. I pointed out that it was ridiculous that Cambridgeshire
does not benefit, whereas Bedfordshire, Oxfordshire and Hertfordshire do. This creates great ill-feeling. I do not believe that it can be rectified by the Association of County Councils
and I said that the Government should get a grip on the matter. The Secretary of State replied:
I understand very well the concern that my hon. Friend expresses. Indeed, it has been expressed to me very often by several of my hon. Friends. I understand the strength of feeling on this issue, and I can give my hon. Friend the undertaking for which he has asked".—[Official Report, 3 February 1993; Vol. 218, c. 339.]
I hope that that will be reiterated by the Minister when replying to tonight's debate, and that we shall have some action at long last. The whole principle of area cost adjustment is completely outdated. It is stuck in a sort of rigid time warp. It is time to scrap it and start again from scratch.
I have been pleased to note the way in which the mood of Government seems to have changed over the years. For example, yesterday the Secretary of State repeated that he was
going to undertake a fundamental review of the SSA system in time for the next settlement".—[Official Report, 24 March 1993; Vol. 221, c. 908.]
I hope that the consensus on the issue between all Cambridgeshire hon. Members will work on the hearts and heads of Ministers, so that next year there will be an end once and for all to the unfairness from which the fastest growing county in the country has suffered for far too long.

The Parliamentary Under-Secretary of State for the Environment (Mr. Robin Squire): I wish at the outset to congratulate the hon. Member for Cambridge (Mrs. Campbell) on her good fortune in securing this debate and on the way she spoke. I also congratulate my hon. and long-time Friend the Member for Cambridgeshire, South-West (Sir A. Grant) and my hon. Friend the Member for Cambridgeshire, South-East (Mr. Paice), who has been in his place throughout this short debate. At some

time this morning—which, as we know, was Wednesday—hon. Members on both sides must have wondered whether this debate would take place.
I am pleased to have another opportunity to speak about the calculation of standard spending assessments, or SSAs as they are known, focusing this time on the calculations for Cambridgeshire. Those assessments have an important place in the system of local government, but they are often misunderstood. I hope that hon. Members will bear with me if I begin by explaining some of the general principles, before going on to explain how they apply to Cambridgeshire in particular. Indeed, only by understanding the general principles can one hope to understand any individual calculation. That is because it is a hallmark of SSAs that they must be calculated on the basis of general principles, applied fairly and consistently to all authorities providing a particular service.
Hence, the method of calculating the SSA for Cambridgeshire is, and must be, the same as the method of calculating the SSA for other counties. That is a vital safeguard against arbitrary determinations and a safeguard which, I trust, commands widespread support in the House. I do not wish to stray into very controversial territory tonight, but I assure the hon. Lady that, back in the days when I was leader of a local authority, before I came into this House and when there was an alternative Government in power, the system allowed for a significantly greater variation on precisely the lines that she mentioned—I think her words were "political fudge".
In any discussion of SSAs, we must bear in mind the underlying aim of the SSA calculation: to calculate a figure for each authority—its SSA—which represents the Government's assessment of the level of revenue spending by that authority which should enable it to provide services to a common standard. This common standard is that which is consistent with the Government's view of the appropriate level of revenue expenditure for all local authorities combined, bearing in mind the position of the economy.
The SSA has two main functions. First, it helps to determine the amount of revenue support grant received by each authority. In effect, the grant is distributed in such a way that, if all authorities were to spend at the level of their SSA, the level of local tax could be broadly the same in all areas of the country. This was the case with the community charge, and will also apply to the council tax. Secondly, SSAs are used—as the hon. Lady is aware—as a benchmark for comparison within the capping framework when forming a view as to whether the level of an authority's budget, or the proposed increase in that budget, is reasonable or excessive.
These are vital roles, and they explain why I have stressed that it is important for SSAs to be calculated on general principles which are seen to be fair. I should therefore like to spend a few minutes explaining the basis of the calculations.
Although SSAs were actually introduced for the first time in 1990–91, they are the end result of a long period of evolution, in comparison with their predecessors under the previous system, which were known as grant-related expenditure assessments. SSAs have the great advantage of a much reduced degree of complexity. Nevertheless, they build on the large body of detailed research evidence which underpinned the earlier assessments. They also


share with them the characteristic of having been extensively discussed, over a number of years, with the local authority associations.
SSAs aim to take account of the main characteristics of an authority which will affect its spending requirement. This is a daunting task covering expenditure in 1993–94, of some £37 billion by over 400 local authorities. There are, of course, constraints on the extent to which this objective can be achieved at any one time. In particular, SSAs have to be based on sound data sources—the census being a prime example—which are available on a consistent basis for all authorities.
Many factors are taken into account in the formulae, and they fall broadly into three categories. There are demographic factors—for example, what proportion of the population are children or elderly. These give us the size of the actual or potential client groups which help determine the need to spend in key areas such as education or personal social services. There are the socio-economic characteristics of the population. Research has shown that, for some services, the need to spend can vary with the number of people falling into certain disadvantaged categories—for example, the numbers in single-parent families or those receiving income support.
These indicators are reflected in SSA calculations. For example, over one fifth of the education SSA element is distributed by reference to an indicator of this kind representing additional educational needs—referred to by the hon. Lady.
Finally, there are adjustment factors to allow for higher employment costs in London and the south-east.
How then do all these factors affect Cambridgeshire? The total SSA for Cambridgeshire in 1993–94 is just over £380 million, which is an increase of 2·6 per cent. on last year's total. After adjusting for major changes of function. of the total, about 57 per cent.—£218 million—is accounted for by education, up by 2·6 per cent. on 1992–93, and a further 13 per cent.—£50 million by personal social services, up by 4·2 per cent. on 1992–93. This, incidentally, excludes the special grant in respect of the local authority's new responsibilities for community care. The remaining 30 per cent. of the SSA is distributed across a number of other services, such as police, fire, and highways maintenance.
It is, however, difficult to discuss such figures sensibly without providing some basis for comparison. If, for example, we divide the total SSA by the resident population of Cambridgeshire, we find that Cambridgeshire's SSA is £568 per head of population. That is a little below the average for all counties, which is £584 per head. In fact, Cambridgeshire ranks 22nd of the 39 counties on this basis. I might also mention here that Cambridge city, the constituency represented by the hon. Member, has an SSA of £116 per head, which is over 25 per cent. above the national average for shire districts, which is £92 per head; it has, moreover, increased by 5·2 per cent. on the equivalent figure for 1992–93, an increase which is more than twice the overall average for shire districts.
We find much the same picture if we examine the figures relating specifically to education. Cambridgeshire's education SSA includes £1,802 per pupil aged five to 10 and £2,613 per pupil aged 11 to 15—again, in both cases just below the average for all counties.
What underlies those figures? If we concentrate on education, which is far the largest component, we find that

the formula includes a basic element per pupil in each age group which is the same for all authorities. There are then additional amounts in recognition of various special factors, the three most important being sparsity of population, an index of additional educational needs and a cost adjustment to compensate for the higher employment costs in London and the south-east.
Cambridgeshire receives a relatively high allowance in respect of sparsity, an adjustment that recognises the inevitable diseconomies of running small schools or incurring high school transport costs. It also receives an amount just above the county average for additional needs. This in turn reflects the fact that they are positioned towards the middle of the range in terms of the indicators used to measure the incidence of additional needs.
To take one example, the 1993–94 indicators show that about 12 per cent. of children in Cambridgeshire are children of income support claimants. That compares with 29 per cent. for Cleveland, at one end of the county spectrum, and less than 8 per cent. for Surrey at the other. In fact, in terms of the overall index for additional educational needs, Cambridgeshire again ranks 22nd of the 39 counties. Such reasons explain the differences between SSAs per head to which the hon. Lady referred.
Then there is the area cost adjustment. I know that it is an issue of particular concern to the hon. Lady. It is a topic which has been raised by Cambridgeshire on several occasions, including a meeting which took place just before Christmas with my hon. Friend the Minister for Local Government. As my hon. Friend the Member for Cambridgeshire, South-West pointed out, he has raised the issue several times. It is a fact that Cambridgeshire does not benefit from the area cost adjustment, which is confined to London and to counties in the south-east. It is based mainly on evidence from the new earnings survey. This is a survey based on a sample of information from employers, and the sample is too small to allow reliable figures to be calculated for individual counties, even if that were considered desirable. The analysis does, therefore, have to be calculated at a regional level and, on this basis, results have shown that only London and the south-east face costs which are consistently and significantly above the national average.
It has also been suggested that the area cost adjustment may be too high because it is well above the standard rates of London weighting paid—as the hon. Lady herself pointed out—to groups such as teachers, police and firemen. We have not so far been convinced by this argument, as other relevant costs need to be taken to account. More generally, however, we have been struck by the number of representations being made about the area cost adjustment, arguing—I stress this—for changes in both directions, and by the strength of the feelings aroused. The Secretary of State has therefore already made it clear that this will be one of the topics to which we shall give very careful attention during this year's review of the SSA methodology.
I shall write to the hon. Lady about at least one of the points she made, because time will not allow me to deal with it. She spoke about cuts in education in general. Of course, she is well aware that the detailed budgets of local authorities are a matter for the authorities themselves; in general, however, we believe that provision made within the settlement is adequate when account is taken of the


much reduced level of inflation, the policy of pay restraint for public sector workers and the scope for improved efficiency in the delivery of public services.
In reaching our decisions, we took account of the pressures on local authority services, but we also had to have regard to the capacity of the taxpayer, locally and nationally, to bear the burden of expenditure. Job losses are sometimes unavoidable, and of course they are always a matter of regret, but local authorities must play their part in the vital task of controlling public expenditure.
With the hon. Lady's permission, I will write to her about the delays—as she would put it—in reflecting increases in pupil numbers, and about additional educational needs.
Of course, all local authorities would like to have more money, and I am sure that there are many worthwhile projects on which the extra money could be spent. However, we all have to live within our means. I believe that the settlement that we have provided for 1993–94 is very fair, in the light of the current low levels of inflation

and the difficult economic circumstances that the country faces. It is fair both to the beneficiaries of services and to those who pay for them.
I am pleased to note that council taxes in Cambridgeshire will generally be well below the national average. No doubt that reflects in large part the prudent management by Cambridgeshire authorities in general of the resources at their disposal.
I concede that many criticisms have been made of SSAs, but that is to be expected when everyone would like a larger slice of the RSG cake. I would never wish to pretend that SSAs were perfect. Indeed, I would say that perfection is a target that is always bound to prove elusive in an area of such complexity. It is one of the great merits of the system that the entire process is completely open, with all data available for inspection. The methodology is continually under inspection with local authority representatives and other interested parties.
The process of trying to improve and update SSAs is never-ending. As I have said, 1993 will be an especially busy year in SSA development, not least because we expect to take on board the full range of indicators from the 1991 census.

Question put and agreed to.

Adjourned accordingly at half-past Ten o'clock.